Transport difficulties as export season kicks off
Congestion at the ports and a lack of space on planes and container ships is starting to hit exporters, manufacturers and ultimately consumers in the pocket.
Global supply chains have been sluggish since Covid-19, delaying imports. And while exports 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.’’
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 timesensitive perishables. Strawberry Growers New Zealand executive manager Michael Ahearn said growers were ‘‘right in the teeth’’ of the harvest. Many were resigned to lower returns – although strawberries would be cheaper in New Zealand.
‘‘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 focused 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,’’ chief executive Rachel Barker said.
‘‘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.’’
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’’.
Some retailers are already signalling price hikes. Mitre 10 hardware chain 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.
The Ministry of Transport is leading a multi-agency group to keep tabs on the congestion and ensure regulatory issues do not cause problems.
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.
The New Zealand Council of Cargo Owners, which serves exporters like Fonterra, Zespri and majormeat companies, told members that ‘‘cascading congestion issues’’ would take some time to clear, just as meat and dairy exports rose to a seasonal peak.
Contributing factors included a port strike in Australia, and the effect of Covid-19 restrictions on staffing and infrastructure at Auckland.
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 sometimes several times higher than usual.
Some relief is on the way. This week KiwiRail announced it was putting four extra freight trains from Port of Tauranga to Auckland’s Metroport.
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.