NZ shipping customers could lift their act too in supply-chain congestion - workshop finding

Freight congestion drives up costs and places severe stress on NZ business, says MoT. Photo / Michael Craig

Importers and exporters frustrated about New Zealand's supply-chain bottlenecks might want to look in the mirror for part of the problem, suggest results from a big sector workshop.

The recent forum, organised by the Ministry of Transport and attended by a who's who of players in the supply-chain sector, heard shipping customers themselves have a bit to answer for in the congestion.

An MoT summary of the event identified as problems customers importing and holding more inventory to hedge against delays, so swallowing capacity faster, and customers overbooking ships and then not using their allotted slots.

These came under "identified problems" by the workshop in the area of freight movement analysis. Also in there was a lack of empty containers from overseas markets, an imbalance in export/import and empty/full container exchanges; an imbalance in freight movements to and from Auckland, and productivity issues from Ports of Auckland's staff hours shortage.

The main problems for supply-chain participants when it comes to system information about congestion included container shipping berth windows being suspended, fragmented information, lack of reliable real-time information on ship and container movements and available port capacity, and the inability to forecast or plan ahead in the short or long term, making congestion worse.

In this area, supply-chain customers also had to take some responsibility.

"Customers expect/assume there will always be capacity to meet demand," said the MoT summary.

When the workshop looked at problems in the sector's capacity and resilience it found: Existing infrastructure was designed to meet existing demand; insufficient capacity and ability to respond quickly to shocks; multiple bottlenecks at ports, depots and transport links; ports at capacity with limited room to expand, hemmed by regulations; and a lack of cool-store and container-yard storage. The ports and transport sector was also short on a skilled labour force.

The workshop identified a wide range of short-term outlooks on freight movement, system information and sector capacity to June this year, and likely to extend beyond.

Among them was to investigate alternative import ports to Auckland and reposition routes to Auckland; for the Ministry for Primary Industries (MPI) and Customs to consider extending staff hours; and to incentivise cargo volumes from day to night to smooth out lumps at container depots. The Government, ports and KiwiRail were suggested as major contributors to these aims.

Identifying sites for off-port container storage, fast-tracking consenting processes for storage depots, and identifying "critical roles" and a stock take of the workforce were considered priorities in the short-term.

Suggestions for the medium to long term - from June 2021 and January 2022 - included relocating distribution centres to enable better freight movement, incentivising more efficient freight movement (industry); developing improved software for planning and high-level aggregate information on ship and port capacity to enable forecasting (Government with industry) and developing a market-led freight/supply chain strategy (Government with industry).

On the sector capacity side, medium- to long-term thinking suggested building the capacity of road, rail, ports and coastal shipping where deficits have been identified, consideration of a per-container charge to provide a crisis fund, and examining the ownership models for ports and infrastructure.