CentrePort warns of 'extreme nervousness' about coronavirus, as log volumes begin to fall

CentrePort says coronavirus has created "the type of nervousness we haven't seen before" among exporters. Photo / Mark Mitchell

Wellington's port company is bracing for a sharp downturn in log and meat exports, warning that customers are deeply nervous about the impact of coronavirus.

CentrePort, owned jointly by the Wellington and Horizons regional councils, said volumes of logs coming to the port were falling, while exporters in the log and meat sectors were reporting cancelled orders.

"We're seeing nervousness, the type of nervousness we haven't seen before," commercial manager Andrew Locke, who has worked in the port industry for 27 years, told the Herald.

"I've been doing this a long time. I've worked in the port industry through Sars, through the Asian Crisis in '96. This feels quite different and there seems to be a lot of nervousness among very experienced people," Locke said.

"What we believe is, we will see a reduction in the volumes over the wharf, like most New Zealand ports, in the next six to eight weeks."

Locke pointed to figures that showed that, since 2004, log imports from China rose from less than one million tonnes a year to more than 16 million tonnes in 2018.

Meanwhile, the traditional markets - Japan and South Korea - had fallen steadily and were now a fraction of the size of China.

"This is different from Sars just because of the reliance of the New Zealand market on the Chinese market. That change has been dramatic."

Exporters - and the port - were trying to assess the impact and Locke said his focus was on the next two months.

"No one is willing to venture a long-term view. We are in, I suppose, a six- to eight-week bubble, trying to understand what it looks like," Locke said.

"Everyone's hoping for the best. I'm not sure people are preparing for the worst yet."

The immediate impact had been on logs, Locke said.

"A number of customers are telling us it's becoming more difficult to secure sales contracts and thus a letter of credit, to facilitate the movement of logs to China," Locke said.

CentrePort was budgeting to export 1.8 million tonnes of logs this year before the coronavirus restrictions were put in place.

"We are expecting quite a considerable downturn in the next six to eight weeks," Locke said.

"At the extreme end" it was possible volumes would half over the coming two months. "I think it's bad but I don't think it's catastrophic."

Meat exporters were also nervous.

"We know of orders being cancelled and meat exporters are looking for alternative markets for products which traditionally go into China.

"We haven't seen any softening of import volume yet, but we suspect that's going to come. We suspect that's a timing issue, because the ports in China are becoming congested.

"There's some difficulties for importers on the horizon; we haven't seen it yet but we suspect there could be some delays in the supply chain."

Ports around New Zealand appear to be facing varying impacts from the disruption caused by coronavirus.

At the start of February Port of Tauranga chief executive Mark Cairns said there was "no question" exports would be hit but the impact would be short term.

Meanwhile Eastland Port in Gisborne has warned the impact on the global log trade could be substantial.

In a statement, Napier Port chief executive Todd Dawson said log exports were still moving through the port, but some exporters had reduced or suspended logging as a result of the disruption.

"We're starting to see the flow-on effects of that now, but it's too early to say how long that will last."

Dawson said it was also too soon to know whether disruption to supply chains in China would have a long term impact "but we're keeping a close eye on the issue".

Shares in Napier Port have dropped 10 per cent since the start of February.