Monday, April 22, 2024

Sea freight turbulence set to continue

Neal Wallace
Exporters look set to endure another season of disrupted shipping, with little expectation of improved global logistics for at least the next 12 to 18 months. A Ministry of Transport spokesperson says freight sector leaders have stated that reduced sea freight capacity is due to global port congestion and not shipping lines withdrawing NZ services.
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Exporters look set to endure another season of disrupted shipping, with little expectation of improved global logistics for at least the next 12 to 18 months.

A Ministry of Transport spokesperson says freight sector leaders have stated that reduced sea freight capacity is due to global port congestion and not shipping lines withdrawing NZ services.

“Ships are taking a longer time to complete each rotation of port calls, and so are calling at each port less frequently, which reduces available capacity,” a ministry spokesperson says in a statement.

Officials believe disruptions will continue for at least the next 12 to 18 months but it is unclear whether this will permanently alter freight logistics.

Media company Shipping Watch reports that as at September 2, globally 376 ships were waiting to enter ports, with 176 facing bottlenecks in China, after the Meishan container terminal closed for two weeks due a worker testing positive for covid-19.

In the US, 34 ships are waiting to access the ports of Los Angeles and Long Beach, including one that has been waiting 15 days.

Customs, Brokers and Freight Forwarders of NZ chairman Chris Edwards says in the last year 102 fewer vessels visited Tauranga but they exchanged more containers, suggesting those that called were larger ships.

He says uncertainty over shipping services and rates will make the coming months challenging for exporters.

A new shipping line, TS Lines, is due to start servicing NZ ports next month at current market shipping rates, while in the last year Zim Lines has also started a NZ service.

“They are not offering discounts, presumedly because they see no need to do so,” says Edwards.

The TS Lines schedule starts in China, where it calls at four ports, before stopping in Australia then NZ before returning to Asia.

The new entrants will certainly benefit importers but Edwards cannot say what it will mean for NZ exporters.

He believes shipping prices will be unchanged for 12 to 18 months but notes two lines, CMA CGM and Hapag Lloyd have capped rate increases until February.

Edwards says consumer demand driven by countries emerging from covid-19 restrictions will influence shipping demand and services, as will companies ordering larger quantities of product than previously in a “just in time” supply chain model.

Shipping issues have hit small and medium-sized exporters the hardest, with larger exporters having the scale to cement connections with shipping lines, he says.

Council of Cargo Owners Association chairman Simon Beale says the annual lull in demand between seasons masks continued uncertainty and he cannot see prospects for the coming export season being better than last season.

“There is still going to be a lot of disruption.”

Some exporters are renegotiating shipping rates and while talk is of increases, also of importance is space availability and service guarantee.

A statement from the Ministry of Transport says its short-term focus has been easing domestic port congestion, particularly at the Ports of Auckland (POAL).

“We have been working closely with Immigration New Zealand and MBIE to facilitate POAL’s hiring of skilled crane drivers from offshore, which will help boost productivity. 

“We have granted exemptions to allow international shipping lines to exercise more operational flexibility in moving cargo and re-positioning containers around NZ, while agencies have also supported industries to address specific instances of supply chain blockages on and offshore.”

The Government committed $170m from May 2021 to October 2021 to support airfreight through the Maintaining International Air Connectivity (MIAC) scheme.

This has enabled more than 8800 flights to carry over 166,000 tonnes of airfreight worth around $13.3 billion, with funding paid directly to airlines for services that are not commercially viable

“A decision on whether the MIAC scheme will be continued beyond 31 October has not yet been made.”

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