Shipping challenges mount

Sudesh Kissun

Shipping disruptions caused by Covid have been exacerbated by Australian port industrial action and Port of Auckland capacity issues.

New Zealand exporters and importers are facing “a perfect storm” as global shipping challenges mount.

David Ross, chief executive at Kotahi, New Zealand’s largest containerised exporter, says a number of supply chain challenges have come together to create a perfect storm.

He told Rural News that this could be the “new normal” well into 2021.

For NZ exporters and importers, disruption caused by Covid has been exacerbated by Australian port industrial action and Port of Auckland capacity issues.

Ross says these continue to disrupt container availability flows and coupled with globally disrupted supply chains, few vessels are managing to run to schedule.

“This is putting pressure on service levels,” says Ross.

“This situation is being played out in most locations around the world, with shipping lines forced to make adjustments to their vessel itineraries to manage capacity, congestion and weather impacts with global shipping statistics reporting that on-time performance in the Asia-Pacific region has dropped to just 15%, from a norm of about 70-80%. That’s a big drop.”

Kotahi, founded in 2011 by Fonterra and Silver Fern Farms, has long-term strategic commitments with Maersk Line and Port of Tauranga to attract larger, more efficient ships to New Zealand.

 Ross points out that in these market conditions, the value of strong strategic partnerships come to the fore.

“Working collaboratively with our customers and partners, such as Maersk and Port of Tauranga, we have been managing this situation for a number of months and continue to operate at close to 99% container availability.

“There is an unavoidable small level of delay due to the scale of ship schedule slippage, however we are confident we will continue to get all our customers’ cargo to export markets,” he says.

The reliance on shipping is higher than ever as few planes are flying international routes.

ANZ agri analyst Susan Kilsby notes that demand for most goods has remained intact throughout the pandemic and it has been the service sector that has taken the brunt of the pain associated with lockdowns and physical distancing measures.

She says shipping costs are rising rapidly.

“Shipping schedules are constantly changing, with numerous schedules being cancelled or containers being rolled over and simply not being collected.

“This has left many empty containers stranded well away from where they are most needed, with refrigerated containers particularly difficult to source,” Kilsby explains.

“Shipping times are being extended due to delays at ports, resulting in product shortages and buyers bringing orders forward in order to offset the delays.”

NZ’s second largest dairy processor Open Country Dairy says it has had to manage through some shipping delays but is, overall, in a very good position, with shipments for the season being on track.

 OCD chief executive Steve Koekemoer says shipping orders continues to be a challenge globally.

“It affects all sectors due to Covid. Our supply chain team are doing a fantastic job managing the demand in this highly disruptive environment and our customers have been very appreciative of the efforts put in,” says Koekemoer.

How the port blockage threatens our global trade network

Nadia Trent05:00, Feb 22 2021

Port of Auckland’s automation issues and worker shortages have not only slowed imports but put our shipping routes at risk.
CHRIS MCKEEN/STUFFPort of Auckland’s automation issues and worker shortages have not only slowed imports but put our shipping routes at risk.

OPINION: The recent snarl-up at the Ports of Auckland (POAL) has rightly received a great deal of media coverage lately.

The congestion at this one port has been felt widely across New Zealand as supply chains, and ultimately consumers, absorb the costs.

And while the current congestion crisis is painful, it does seem to be short-term. The root set of causes have been identified, primarily automation and labour, and these are now receiving ample attention from port management, the unions, the Government, and the media.

The optimistic expectation is that operational issues at POAL will be resolved in a matter of weeks, issues that have been compounded by Covid-related disruptions.

What we are missing in the conversation, however, is the risk all this poses to New Zealand’s maritime connectivity and how decreasing connectivity could diminish the country’s trade competitiveness over the next few years if left unchecked.

Maersk’s decision to skip Auckland temporarily for Tauranga is a worrying trend.
JOHN BISSET/STUFFMaersk’s decision to skip Auckland temporarily for Tauranga is a worrying trend.

Why the Maersk announcement is a warning

As a small country at the bottom of the world, New Zealand is at the whim of international shipping companies, which have recently shown us they can make swift business decisions to bypass our ports.

Maersk announced that it will be temporarily suspending its port call at POAL, instead opting to only stop at its competitor, the Port of Tauranga, until the congestion issues are resolved.

This is a straight-forward business decision by the shipping line to stay competitive.

Not only do the delays at POAL cost Maersk dearly in terms of anchorage costs, underutilised labour, and unutilised shipping capacity, it bears reputational costs as well.

Delays at POAL have knock-on effects for all the subsequent port calls on Maersk’s service, damaging Maersk’s reputation both with port authorities and the freight forwarders who channel bookings to Maersk.

‘’We have to think carefully about how we continue to entice shipping lines to loop into our small corner at the bottom of the world.’’
JOHN BISSET/STUFF‘’We have to think carefully about how we continue to entice shipping lines to loop into our small corner at the bottom of the world.’’

Covid-19 disruptions have also clearly shown that the bargaining power in global trade lies with the shipping lines.

While there has been a squeeze on many industries, and a reduction in trade volumes, other factors have swung the demand-supply seesaw in the shipping lines’ favour.

As more air cargo is sent by sea and certain industries like electronics and pharmaceuticals increase volumes, we have also seen congestion at ports absorb the supply of available containers in a perfect storm.

Shipping companies have rightly shown they have the freedom to adjust their services with very short notice.

And while the supply strain has increased the cost of shipping a container by nearly 270 per cent, the larger shipping lines have profited handsomely, as their stock prices testify.

Dr Nadia Trent says post-Covid demand for freight had left shipping companies in an advantageous position.
SUPPLIEDDr Nadia Trent says post-Covid demand for freight had left shipping companies in an advantageous position.

Maersk’s stock price more than doubled from February 2020 to February 2021. Likewise, many of the other major companies continue to increase their profits.

It is clear these are not decisions being made to merely stay afloat, but instead to become even more profitable. This should raise a red flag for New Zealand’s competitiveness.

We need to think carefully about how we continue to entice shipping lines to loop into our small corner at the bottom of the world, and offer them a compelling business case, that includes working harder at port efficiency and reliability.

If we don’t, the wider and longer term impact will hurt our maritime connectivity, our international trade, and, ultimately, consumers’ pockets.

New Zealand’s maritime connections are strongly linked to the health of our trade.
RICKY WILSON/STUFFNew Zealand’s maritime connections are strongly linked to the health of our trade.

Our maritime connectivity is decreasing

The maritime connectivity of a country is strongly linked to the health of its international trade.

One way it is measured is using the Liner Shipping Connectivity Index (LSCI) maintained and published by the United Nations Conference on Trade and Development (UNCTAD).

The LSCI measures an economy’s integration within the global container shipping network. The larger an economy’s LSCI, the better connected it is.

China dominates the LSCI chart but countries like the United States, the Netherlands and Germany also rank highly.

There are also smaller countries with significantly lower trade volumes like Singapore, Morocco, or Panama, that rank highly because they are important transhipment cogs in the maritime network.

New Zealand is neither on one of the major trade routes, nor does it boast large volumes (comparatively). Therefore, our relatively low LSCI score is not surprising.

However, what is most concerning is New Zealand’s LSCI score has decreased between the first quarter of 2017 and the first quarter of 2020, while most economies’ scores have increased as maritime trade grew.

Key trading partners like China and the US connect New Zealand to a string of other ports around the world.
CHRIS MCKEEN/STUFFKey trading partners like China and the US connect New Zealand to a string of other ports around the world.

Our bilateral connections matter

This shows New Zealand is becoming more isolated from a maritime perspective and reversing this trend should be a strategic imperative.

Improving port efficiency and reliability would strengthen the business case for shipping lines.

Our efforts at increasing our connectivity should focus on our direct trade partners and other high-ranking LSCI hubs.

Currently our strongest maritime connections are with trading partners in Asia and with Australia. This is as it should be.

In addition to direct trade, China indirectly connects New Zealand to the majority of ports in the world. The predominance of China in New Zealand’s maritime network partly explains why we don’t have stronger connections with Singapore, Malaysia, and Japan.

The strong connections with Panama and the west coast of South America are also a result of geographic proximity on the routes from and to the US.

Connections with our EU trading partners and the United Arab Emirates are lagging significantly, however.

All of these connections and how we manage them are questions of equal importance to the ones about crane automation and expansion plans when it comes to New Zealand’s maritime strategy.

Fewer ship visits will make it more costly to import and export goods, which would eventually hurt consumers.
CHRIS MCKEEN/STUFFFewer ship visits will make it more costly to import and export goods, which would eventually hurt consumers.

A problem that must be fixed

The congestion at POAL is a dire and urgent problem that must be resolved and both port management and our government are addressing it.

But this crisis, in particular Maersk’s choice to temporarily bypass POAL, has highlighted the cut-and-dry business rules that govern shipping lines’ service design.

The corporate behemoths are not beholden to any country. If New Zealand’s ports, and POAL first and foremost, does not showcase world-class operational efficiency and reliability, it will be increasingly difficult to convince the shipping lines to loop their trade routes to our small corner of the world.

Decreased connectivity will make it more costly to import and export goods and this cost will eventually make it to the consumer’s pocket.

Dr Nadia Trent is an expert in supply chain management from the Waikato Management School at Waikato University.

Ports Of Auckland Management COVID-19 Story “embarrassing”

The Maritime Union says claims by Ports of Auckland that Government quarantine regulations are to blame for their failures are embarrassing and should be withdrawn.

A POAL spokesperson complained on Mike Hosking’s Breakfast Radio show yesterday about a “maze like process” to import crane operators.

The spokesperson said “We have to fill out heaps of forms and wait weeks, and it would be great if someone could help speed up everything.”

Maritime Union of New Zealand National Secretary Craig Harrison says the problem is POAL management.

He says the shortage of crane operators in Auckland came about because the port company has not trained enough staff over the last couple of years and has relied on workers doing excessive hours.

“If they had maintained their workforce, they wouldn’t have a problem. No other Port is in this ridiculous situation they have got Auckland into.

The Union believes there could be up to 19 current employees at the Ports of Auckland who have previously driven the container cranes at the Ports of Auckland who are currently carrying supervisory roles within the company who could be redeployed into the role.

Mr Harrison says he believes there were options to transfer workers in from other ports temporarily, and the Union had previously assisted with this process in the past.

He says past employees of the Ports of Auckland are being declined employment as stevedores even though they operated machinery still in use (Editor’s note: see below for company email to experienced job applicant.)

It was disturbing the Port Company seemed to be bringing into question the strict quarantine procedures that were keeping New Zealanders safe as COVID-19 ravaged the rest of the world, he says.

The port management is focused on an automation process that had dragged on for years and is still not working, he says.

“Port management need to be honest with New Zealand about whether they have exhausted all options available to the company within New Zealand.”

Southern manufacturing companies facing uncertainty

Ceri Macleod, general manager of Sorec, a professional body representing the manufacturing engineering sector in the southern region.
SUPPLIEDCeri Macleod, general manager of Sorec, a professional body representing the manufacturing engineering sector in the southern region.

Southland manufacturers are among many nationwide struggling to get supplies into the country in a timely fashion so production can continue and orders met.

Otago-Southland Employers’ Association chief executive Virginia Nicholls said the hold-up of shipping containers at Auckland Port was a significant issue for many manufacturers.

Manufacturers who imported stock and ingredients from overseas needed it arriving on time so work could continue.

“Now they have to hold a bit more because they don’t know when the container is coming, so there’s a lot of uncertainty out there,” Nicholls said.

There were “not too many” manufacturers who weren’t affected.

Among those facing challenges were engineering companies and food companies.

Ceri Macleod, general manager of Sorec, a professional body representing the manufacturing engineering sector across the southern region, said a number of its members had reported delays in receiving goods from overseas.

“This puts additional pressure on the manufacturing engineering sector, particularly in the southern region,” she said.

“Delays can have a significant impact on production and ability to fulfil orders on time.”

Some of the issues could be addressed by pulling together as a network, but it placed extra pressure on its members and their businesses.

Gareth Lyness, sales and supply chain manager of Blue River Dairy, an Invercargill business that exports infant formula from sheep, goat and cow milk, said the company sourced most of its ingredients and packaging from New Zealand.

But some came from overseas and “what used to take four weeks takes eight weeks … or it could take 12.”

Despite not having to stop production at any stage, a number of shipping containers with plastic tops for infant formula cans were delayed at the port. But Blue River had other products it was able to manufacture to cover the delay, he said.

Gareth Lyness of Blue River Dairy [file photo].
JOHN HAWKINS/STUFFGareth Lyness of Blue River Dairy [file photo].

The company had bought in more “safety stock” so it was sitting there in case ingredients didn’t arrive.

“There’s a cost to that but the effect of not doing it and not producing is much greater.”

The company’s logistics team had been able to manage the situation by dealing with suppliers and using multiple ports and shipping lines, he said.

Fonterra global supply chain director Gordon Carlyle said it was experiencing some challenges getting a very small amount packaging and ingredients into the country.

“However, our ability to adapt our operations and product mix means our manufacturing operations are not impacted. At this stage there are no supply issues at our Edendale site.”

Lance Coupland, managing director of Coupland’s Bakeries said it had machinery coming from America that would be two months late and its suppliers of coconut and condensed milk had experienced constraints in getting it into the country, but the company hadn’t been too badly affected.

Retailers were also struggling to get enough product into the country to sell, with the issue highlighted before the Christmas buying rush.

“It’s been a significant issue, no doubt,” Nicholls said.

“And it’s going to take a long time to solve all of this, it won’t be solved in the next few months.”

Import waiting time reduces, but port’s search for skilled staff continues

Containers are loaded on rail wagons at Ports of Auckland ,where ships have been waiting up to 17 days to berth.
PORTS OF AUCKLAND/SUPPLIEDContainers are loaded on rail wagons at Ports of Auckland ,where ships have been waiting up to 17 days to berth.

New Zealanders are continuing to wait long periods for imported goods but delays at Auckland’s port are reducing, as the country’s biggest import port struggles to clear a massive backlog of freight.

Ships have been sitting in the harbour for over two weeks to unload their cargo, as Ports of Auckland grapples with a shortage of skilled operators and a global surge in demand for freight.

In late November, some shipping lines were waiting up to 17 days, but the port says the waiting time is now down to an average of eight days.

However, the delays are not helping retailers like Tony Gallagher, owner of Auckland flat pack furniture store Sofas and More, who was running out of stock.

‘’If I consolidated it all up, I could get it into six pallets and I can hold more than 70,’’ he said.

He said one shipment he was waiting on would arrive in the harbour next week but would not be unloaded for another 10 days.

Ships have been diverted to other ports to relieve congestion in Auckland.
JOHN KIRK-ANDERSON/STUFFShips have been diverted to other ports to relieve congestion in Auckland.

Most customers were understanding, but it was embarrassing to tell people they might have to wait two to three months, Gallagher said.

‘’In the weekend customers are coming in, they are looking at the showroom and going we’ll have that, and I’m going, I’m sorry I can take your pre-order and you can get it in the New Year and they go, oh no, we need it now and walk it out.’’

The Ministry of Transport has committed to help Ports of Auckland recruit overseas workers, which needs over 50 staff to work as crane operators, straddle operators, lashers and other stevedoring roles.

‘’As many other employers have found, recruitment is proving difficult. The labour market is strong, there is not a large surplus of suitable people looking for work,’’ port spokesman Matt Ball said.

The port had found a crane operator and several skilled straddle drivers within the country.

‘’We hope to have another crane crew in place before Christmas and a second by February next year, but recruitment – and training – will be ongoing for some time.

Chris Edwards, president of the Customs Brokers and Freight Forwarders Federation, said the crux of the problem was the staff shortage, not the port’s current automation project.

Freight forwarders say freight costs have risen up to six times what they were at the start of the year.
SUPPLIEDFreight forwarders say freight costs have risen up to six times what they were at the start of the year.

Lack of staff meant only a few of the port’s cranes could run around the clock and he urged the Government to give the recruitment process priority.

“This is an urgent matter and, given the significant cost to the economy, it’s our view that the New Zealand Government should be assisting in this recruitment, much like the Australian Government is currently trying to do in its primary sector.”

As well as delays, importers were also grappling with much higher freight costs.

Edwards said costs were three to six times higher than a few months ago, and overlaid with surcharges for freight going through Auckland.

”A container from Shanghai to Auckland in January, a 20-foot container, would have cost US$500. That price now is around US$3000. And it’s going to be the same for exporters.”

To find ways around the backlog, ships have been diverted to other ports. Cargo has been diverted to Tauranga, Napier, Timaru and Lyttelton, much of it going back to Auckland by road or rail.

One shipping line announced this week it would divert a vessel to Whangarei, but Edwards said the cost and difficulty of getting 2500 containers back to Auckland in time for Christmas would be high.

Importers have been told to plan for six to eight weeks delay in their supply chain.
IAIN MCGREGOR/STUFFImporters have been told to plan for six to eight weeks delay in their supply chain.

Delays in shipping goods from Asia are expected to continue well into next year, complicated by a looming global shortage of shipping containers and severe congestion in Asian trans-shipping ports.

Demand for space has risen so much that some ships are bypassing New Zealand altogether, a practice known as ”blank sailings,” as they try to make up time.

Mondiale Freight Services has advised its importer customers to book space on ships up to three weeks before sailing, and plan for a six to eight week contingency delay in their supply chain.

Exporters are also struggling. Air freight capacity has nearly halved due to the drop in passenger flights and rates have risen by 35 per cent, forcing them to compete for sea freight.

Simon Beale, chairman of the Council of Cargo Owners, which represents major importers and exporters like Fonterra, said the bigger players who had locked-in contracts were managing, but those buying on the spot market were paying big money.

He said most ships were still visiting New Zealand. ‘’There are a couple of ones that have a couple of blank sailings just to help relieve the situation in Auckland. But things are moving.”

Cargo that missed New Zealand would go to Australia and then make its way back. ”Missing out on a week is better than missing out on six weeks.”

However, as the fruit and meat export season looms early next year, exporters were nervous about a potential mismatch and shortage of cargo containers around the world, Beale said.

”Getting boxes in the right place is the key thing between now and that period of time.”

Kiwirail has also been working to help alleviate the congestion in Auckland, putting on extra trains have between Tauranga and Auckland to help clear Tauranga’s wharves, increasing capacity on its South Island train and adding a train from Auckland to Christchurch each weekend.

Meanwhile, a Government scheme to subsidise carriers of high priority air freight has been extended until March.

Air New Zealand has been allocated an average of 55 flights per week under the scheme, providing it with a government contribution of between $100 million and $145m towards cargo revenue over the next four months.

Cargo flights are now providing about half Air New Zealand’s monthly revenue.

Safety fears over 2700 truck trips from giant container ship in Northland to Auckland

There are safety and congestion fears for the road north of Auckland, after news a container ship diverted to Northland will result in nearly 2700 more truck trips before Christmas.

Whangārei’s Northport has agreed to unload 1340 containers off the ship Constantinos P, after congestion at Ports of Auckland meant they could not be unloaded there in time for Christmas.

The ship, run by ANL Container Lines, was originally scheduled to stop at Auckland’s port on December 5 but congestion relating to the Covid-19 impact globally and a lack of staff meant the date was delayed to December 22.

The diversion of Constantinos P from Ports of Auckland to Northport will result in 2700 extra container truck trips, National Road Carriers says. (File photo)
KIRK HARGREAVES/STUFFThe diversion of Constantinos P from Ports of Auckland to Northport will result in 2700 extra container truck trips, National Road Carriers says. (File photo)

Northport agreed to step-up to help, even though the 261m ship will be the largest berthed at the port and it is not fully equipped to unload it, chief executive Jon Moore said in a statement.

Constantinos P will berth at Northport on Sunday and cargo will be unloaded by mobile crane, ready to be carted by road from Thursday.

Northport has handled container ships before but the 261m Constantinos P will be its largest.
NORTHPORT/SUPPLIEDNorthport has handled container ships before but the 261m Constantinos P will be its largest.

But the plan has raised serious safety concerns for the 140km road between Marsden Point and Auckland, according to National Road Carriers chief executive David Aitken.

There will be 2680 extra truck trips on the road due to the ship’s diversion – with trucks having to travel from Auckland to Northport, and then back.

“There is poor roading infrastructure between Auckland and Northport, including two accident black spots at Dome Valley and the Brynderwyns,” he said.

This 2014 crash in the Dome Valley resulted in no injuries, but the road is notorious for crashes. (File photo)
SUPPLIEDThis 2014 crash in the Dome Valley resulted in no injuries, but the road is notorious for crashes. (File photo)

Truck drivers are already at capacity due to the Christmas rush, and they will be interacting with holiday traffic, Aitken said.

“The road is not perfect, and they are going to be sending guys [truck drivers], used to driving metro, on the open road.”

Aitken said there was a lack of alternatives to the road, with the North Auckland rail line currently closed by a $110 million redevelopment.

It is not due to reopen until January 11, although a link to the port’s location at Marsden Point has not been built.

While Northport said coastal shipping was being considered, Aitken did not know what ships would be available to take the containers.

ANL had found a solution to suit themselves, without thinking of the wider consequences, he said, and more work needed to be done to improve the supply chain in the North Island.

Northport has focused on log exports until now, but it wants to have a bigger involvement in the North Island supply chain. (File photo)
NORTHPORT/SUPPLIEDNorthport has focused on log exports until now, but it wants to have a bigger involvement in the North Island supply chain. (File photo)

Moore agreed, saying there was a need for continued central government investment in road, rail and coastal shipping infrastructure.

“While current supply-chain issues impacting the country might be unprecedented, they demonstrate clearly the need for a resilient and geographically-astute Upper North Island Supply Chain strategy that makes best use of the three existing ports.”

ANL has been contacted for comment about the road concerns.

In a statement, the company said it was taking a proactive solution to support retail and the economy.

“We are confident in the capabilities of Northport and glad that we have found this solution with them. Furthermore, we believe Northport will be a suitable alternative gateway for North Island customers.”

Ports of Auckland hiring more staff to help with ‘unprecedented’ demand as ships wait eight days before being processed

About 10 ships could be seen at anchor in the Hauraki Gulf this morning as they wait to be processed by the Ports of Auckland. Photo / Niki Bezzant
About 10 ships could be seen at anchor in the Hauraki Gulf this morning as they wait to be processed by the Ports of Auckland. Photo / Niki Bezzant

Nikki PrestonBy: Nikki Preston

Herald reporter based in HamiltonNikki.Preston@nzme.co.nz

A photo has emerged showing the scale of the backlog of ships waiting to get into Ports of Auckland this morning as unprecedented and unexpected demand sees container ships stuck at sea with goods for an average of eight days.

Up to 11 container ships were anchored in the Hauraki Gulf waiting to be processed at Ports of Auckland at the weekend, but Ports of Auckland general manager of communications Matt Ball said that had now reduced to six.

The ships currently anchored are one bulk carrier, one car ship and four container ships carrying a wide range of goods which could likely include some Christmas presents.

All three upper North Island ports were busy and there were a further five ships at anchor waiting to go into Northport near Whangarei and five waiting to go into Tauranga, Ball said.

Yesterday the biggest container ship to ever berth at Northport, the 261m-long Constantinos P carrying 1340 containers, arrived. Up to 1000 trucks – travelling either at night or during off-peak traffic times – could be needed to move the cargo between Marsden Pt and Auckland from Thursday.

Ports of Auckland had already recruited an additional 15 people to help them process the containers more quickly and hoped to have one extra crane crew in place before Christmas.

“Our biggest problem is that we don’t have enough trained staff to handle the extra demand,” Ball said.

It was also ramping up the use of its robot straddle carriers help move more freight.

Prior to Covid, it was uncommon for Ports of Auckland to have any ships waiting to be unloaded and on the odd occasion when it did there would only be one or two at a time, he said.

“I think the largest queue previously has been when Brown Marmorated Stink Bugs were discovered on board car ships, which resulted in quite large delays to car imports. So this sort of thing only happens in exceptional circumstances, as we have this year with Covid.”

Ball said the delays were not unique just to New Zealand and were happening worldwide.

Demand between Asia and the US had also grown by more than 20 per cent, while New Zealand was facing “unprecedented and unexpected” demand.

The demand was expected to continue into 2021, with more than a month of back orders from manufacturers in China waiting to be shipped.

Last month, the Herald was contacted by a number of frustrated readers who told how they had been waiting for between four to six months for furniture to arrive from overseas as retailers including Freedom blamed impacts from Covid for delays at the ports.

Other retailers have also had to apologise to customers as the delays mean their pre-ordered stock won’t arrive before Christmas.

Explainer: Why can’t we get things to New Zealand?

The spectre of empty shop shelves looms large over the Christmas season due to ongoing international shipping delays to New Zealand.

While people have largely resumed almost-normal life, the global pandemic has wreaked havoc on several manufacturing nations such as Bangladesh, India, China and Guatamala causing issues with product supply.

But fewer ships and choked ports are also preventing goods from being imported and delivered to retailers.

So what are the issues that could result be delaying the arrival of your new couch or appliance?

Industrial action in Australia

Port workers in Australia have taken periodic strike action across key ports over a pay dispute.

While some strikes have been put on hold, new industrial action has been launched in November by tug boat crew.

Shipping channels continue to face a range of challenge getting products into New Zealand.
JOHN BISSET/STUFFShipping channels continue to face a range of challenge getting products into New Zealand.

But the strikes have resulted in ships scrambling to remain on schedule and missing some port visits to make up for lost time.

The tyranny of distance

The disruption at Australian ports has flowed through to New Zealand because many of our shipping services route via Australia. As a result, ships that can’t get into Australia have also bypassed New Zealand.MORE FROM
DEBRIN FOXCROFT • BUSINESS REPORTER

debrin.foxcroft@stuff.co.nz

New Zealand Food and Grocery Council chief executive Katherine Rich described this as “the tyranny of distance” at a time when shipping companies are trying to maximise profits.

Backlog at NZ ports

Goods that do make it to New Zealand often become part of a huge backlog at ports, particularly in the North Island.

Congestion has become so bad that some shipping lines have introduced a surcharge on cargo passing through Ports of Auckland, on top of shipping rates that are sometimes several times higher than usual.

There are a number of reasons for the backlog, including a Covid-19 related delay in a major automation project at the Ports of Auckland and a struggle to get the right staff to man the port’s eight cranes.

Demand for consumer goods has also increased 20 to 25 per cent compared to last year.

As a result, Ports of Auckland has been accused of overloading the Port of Tauranga with vessels there during its peak export season.

Reduced shipping to New Zealand means there is also a shortage of empty shipping containers needed for exporters to get goods out of the country.

Mainfreight managing director Don Braid told RNZ that the domestic freight network was “finite”.

“There’s only a certain number of trucks, trains and coastal shipping containers that you can have. So, what we are asking our customers to do is to order earlier, and have less expectation on quick delivery,” he said.

New Zealand Food and Grocery Council chief executive Katherine Rich says New Zealand suffers from a “tyranny of distance”.
SUPPLIEDNew Zealand Food and Grocery Council chief executive Katherine Rich says New Zealand suffers from a “tyranny of distance”.

Fewer flights

There are still significantly feweraircraft flying in and out of New Zealand than before the Covid-19 pandemic.

International flights out of New Zealand have dropped from about 600 a week to about 120, nearly halving air freight capacity.

This is particularly an issue for perishable goods like strawberries.

Limited production in some manufacturing countries

Production is ramping up in countries such as China, however, some are still struggling with controlling the Covid-19 virus.

Bangladesh, the world’s second largest garment manufacturer, is facing another wave of lockdowns this month.

This could cause a shortage of clothing around the world.

But it’s not all bad news. While Bangladesh and other manufacturing nations are still struggling with Covid-19, China has largely bounced back to pre-virus production levels.

Supply Chain On Brink Of Overload Says National Road Carriers

Thursday, 19 November 2020, 4:34 pm
Press Release: National Road Carriers

The New Zealand supply chain is on the brink of overload and it looks like the upcoming peak imports season may push it over the edge says National Road Carriers Association (NRC) CEO David Aitken.

“Worldwide supply chains are in disarray,” says Mr Aitken. “The current pandemic affects everything, and the transport and logistics sector is in the thick of it. Bigger and better resourced countries have higher levels of critical infrastructure to cope with this, but it does not take much to bring New Zealand Inc. to its knees. Shipping companies and ports across the country are already struggling to keep up with consumer demand and the worst is yet to come.”

Mr Aitken says the problems have been brought about by a combination of factors including booming exports from North Asia and not enough vessels, industrial action across the Tasman causing shipping delays of up to eight weeks, COVID-19 and Ports of Auckland and Port of Tauranga facing some major challenges of their own. With berth schedules currently suspended at Ports of Auckland, not to mention the introduction of automation and staff shortages, and more vessels docking at Ports of Tauranga, receival and delivery times are constantly changing at both ports with little or no notice.

Mr Aitken also says airfreight schedules are not what they once were. “There are few passenger planes arriving with freight in their holds. The airfreight that does arrive is much more expensive. That urgent part you needed from the warehouse in Singapore is not available now. It will be shipped by sea and arrive in six weeks. If you need it in a hurry for Christmas, then you should have ordered it in October.

“Consumers and producers cannot count on getting what they want when they were used to having it. Not planning ahead will have consequences because the stock not ordered early will not be available on time.”

He says the transport sector is bearing the brunt of these issues and is facing big challenges. Road transport is the one thing that binds the whole machine together but operators are struggling with lost capacity, poor productivity and combined truck and administration costs.

“If it were not for the trucking industry, the Ports would close within days. By association, so would rail, and container depots because with no throughput the shipping lines would soon bypass New Zealand altogether. Importers and exporters would suffer terribly and so would the economy.

“The road transport industry is carrying and supporting the whole supply chain and working alongside sea, air and rail freight to keep the country moving. If you’ve got it, a truck delivered it.”

Mr Aitken says the supply chain industry – the Ports, the empty container yards and the freight industry – need to work together to understand each other’s issues and communicate better.

“There needs to be clarity around roles and responsibilities and we need to stop blaming each other, which brings about the increased costs to the carrier when it’s no one sector’s fault. Communication needs to improve and, when there is an issue, we need to identify it quickly and talk to the people who know how to fix it. Better alert systems need to be put in place.

“Unfortunately instead of working in with the road transport industry, the Ports and empty container yards are adding costs and constraints like reducing the free time for containers in their yards, adding penalties for non-delivery and increasing vehicle booking system (VBS) costs all when we need to reduce the pressure on the supply-chain. These network providers need to talk to the carriers who keep them afloat and engage some very simple but very effective measures.

“Currently all the costs fall on the carriers and that will filter down to the consumer because the carrier cannot wear those mounting costs any longer. This will make New Zealand less competitive on a global scale and, with failing imports on the horizon, a lack of co-operation between supply chain sector parties will be to blame when the system overloads and stops completely.”

KiwiRail looks into easing congested freight

KiwiRail is working around the clock to improve the movement of freight to and from the country’s two biggest ports, Auckland and Tauranga, which are congested.No caption

The domestic supply chain is congested, with industrial action at Australian ports and disruption in other key markets, combined with the annual pre-Christmas freight rush and peak export season.

KiwiRail has increased its freight service between Auckland and Tauranga and is ready to put on more services between Wellington and Auckland.

Chief executive Greg Miller said rail is the last major part in the supply chain.

”We are releasing a lot more train allocations and increasing capacity to help de-congest the supply chain to try and get products to market pre-Christmas. We have increased the available capacity between Auckland and Tauranga by 20 percent in the last two weeks.”

Miller said port companies in Auckland and Wellington are doing all they can to reduce congestion.

He said there is more customers can do to speed up the process.

”We are asking all freight forwarders to clear their containers from inland depots as quickly as practical.

”Notification of container arrivals is something that everybody is discussing and the advanced shipping intel is getting out there but we are asking all truck companies and international forwarders to clear their cargoes as soon as they possibly can,” he said.

A shortage of containers could spell problems for this country’s exporters as congestion at ports slows the supply chain.

Miller said delays in inbound cargo cause a flow-on effect meaning fewer containers are available for use to export goods.

”There are challenges of empty containers being available for exporters because of the inbound effect. So in the supply chain if you get something like a Covid or an industrial issue you can very quickly get delays that ripple up and down the supply chain.

”So that is why we need to work in a co-ordinated way with everybody.”

Miller said it could take some time before freight movements are back to a more normal level.

KiwiRail and CentrePort in Wellington are trying to come up with ways to work together to help relieve the pressure.

CentrePort chief executive Derek Nind said his port is ready to play its part by trying to ensure that customers do not face delays of up to three months in having their freight delivered.

”CentrePort has the capacity to process additional cargo from ships unloading in Wellington. Working with KiwiRail, the freight would be put on northbound trains to get to their ultimate destination in a timely manner,” he said.