Friday, April 12, 2024

MFAT warns of shipping delays

Neal Wallace
Impacts of Suez and Panama troubles likely to worsen as peak export period arrives.
Reading Time: 2 minutes

Shipping delays during New Zealand’s peak export season are likely on two key trade routes, warns a Ministry of Foreign Affairs and Trade report.

It says conflict in the Red Sea and disruption from drought in the Panama Canal have already caused delays for exporters, rising transport costs and, in some cases, cancelled export orders – and this is likely to get worse.

“These impacts are likely to worsen as we move into NZ’s peak exporting period to Europe from April to May.”

Attacks by Iranian Houthi rebels on commercial shipping traversing the Red Sea are disrupting trade between Europe and NZ, causing shipping companies to avoid transiting through the Suez Canal.

In the other direction, capacity constraints with the Panama Canal are also causing delays with low water levels due to drought meaning just 24 ships a day are able to transit the canal compared to the usual 36 ships a day.

The Suez Canal services between 12% and 15% of world trade and 30% of containerised shipping.

Bypassing the canal means ships have to take the more circuitous route around Africa to reach Europe, increasing the voyage distance by 40% and leading to shipping delays of two to five weeks.

Since the attacks by the Houthi militants, trade volumes through the Suez Canal have dropped by 40% due to ships rerouting, the report notes.

The report says that Europe, the United Kingdom and North Africa accounted for $7.7 billion of NZ exports in the year to September 2023 and provided $15.7bn worth of our imports. 

It warned of disruption to imports of machinery, vehicles, retail medicines and vaccines, and fertiliser from North Africa.

“As a result, the disruptions could also impact NZ households and businesses through price rises for some imported goods.”

The Panama Canal is a key trade route between the Indo-Pacific and Europe and accounts for 7% of global seaborne trade.

The report says draft restrictions on vessels using the Panama Canal fall heaviest on the largest Panamax and Neopanamaxes container ships.

“Some key New Zealand exporters have been able to navigate restrictions with the use of smaller chartered vessels to get produce to market.

“Nevertheless, disruption to shipping via the Panama Canal is likely to be lifting the cost of all shipping transiting the waterway.”

Total
0
Shares
People are also reading