A blockage in the Suez Canal and snarl-ups at other foreign ports are likely to worsen New Zealand shipping woes, freight experts say.
A skyscraper-sized ship, the Ever Given, became lodged in the Egyptian canal on Tuesday, blocking the globally important shipping link between Europe and Asia.
Chris Edwards, president of the Customs Brokers and Freight Forwards Federation, said the resulting delays would have ”a significant impact, absolutely”.
”The majority of the European vessels come through the canal to New Zealand.”
He said there could also be unforeseen impacts, such as a rise in oil prices. And shipping companies might well add surcharges for being delayed or having to reroute.
Shipping costs are already at historically high levels. A 20-foot equivalent container between New Zealand and China or south-east Asia now costs between US$3000 to US$4000.
Other congestion around the world is also slowing world trade. In the US, port delays in Los Angeles and Long Beach have dragged on for weeks, making imports out of and exports to the US extremely difficult.
West Coast ports were so clogged it would take 40 days to clear a vessel even if no other ships joined the queue, Edwards said.
Ports on the East Coast were also now backed up and the situation was expected to get worse with the US government paying out stimulus packages which were expected to send Americans out shopping.
Shipping lines were reacting accordingly, slowing US connections. ‘’It also means that both export containers to the USA and containers destined for New Zealand are not being shipped,’’ Edwards said.
Visits that used to be weekly from the US to New Zealand were now coming four to six weeks.
For Kiwi Harley Davidson retailer Ray Pratt, an order he had placed in late October was now due in April, a five-month wait rather than the normal six weeks.
“Things are extremely slow … We’re not meeting our sales targets because we just can’t get the bikes.”
He was nervous as to whether customers were giving up. ‘’Some of them hang on … but some people might go and buy another brand, something they can get their hands on.’’
Edwards said the industry had expected issues at domestic ports would be ”problematic until the middle of the year” but the world situation was muddying that forecast.
“I think that American story won’t change all year.”
Back home, New Zealand importers are currently choosing between waiting nine days and paying a surcharge for their ship to berth at Ports of Auckland, or waiting a similar or longer time for products railed to Auckland from Tauranga.
Some fruit exporters are having difficulty sourcing containers, which are largely concentrated in Auckland and have not been distributed as usual around the country.
Catherine Beard, executive director of Export New Zealand, said it was early days for the Suez issue but logistics was ‘’always complex and very dynamic’’ and firms were normally good at being nimble.
The challenge for businesses at present was arrivals and departures were very unpredictable.
The delays were putting extra costs on everyone, “so people are having to hold onto bigger inventory, [there’s] the cost of capital being tied up in stock, the additional cost of maybe having to hire warehouses to store the inventory, where previously you didn’t need that because it was more of a just in time model.
“They’re probably still able to keep their customers happy because they’re doing workarounds but their margins are disappearing… So I think financially it’s going to be quite a tough year.’’
One bright spot for New Zealanders is the start of a new weekly route between Hong Kong and Auckland by Israeli shipping line Zim.
Maersk has also put on a weekly coastal service, the Sirius Star, to drop off containers around the country.
Meanwhile, observers are marvelling at the size of the ship blocking the Suez, the Ever Given, which is among the largest cargo ships in the world, capable of carrying some 20,000 containers at a time.
“Blocking something like the Suez Canal really sets in motion a number of dominos toppling each other over,” Lars Jensen, chief executive of Denmark-based SeaIntelligence Consulting told AP.
“The effect is not only going to be the simple, immediate one with cargo being delayed over the next few weeks, but will actually have repercussions several months down the line for the supply chain.”