Maersk expects NZ supply chain disruption to continue this year.
Container shipping giant Maersk says New Zealand is slower to recover from the pandemic supply chain upheaval than the global average and expects disruption to continue for the rest of this year.
“We continue to see slower recovery of schedule reliability and network stability in New Zealand compared to the global average,” said Maersk’s Oceania chief My Therese Blank.
“The schedule reliability on the Oceania to Asia trade was 38.8 per cent in January compared to the global market performance at 52.6 per cent in the same period,” she said, citing Sea Intelligence’s February report for global liner performance.
Blank said with the reinstatement this month of fixed time slots for vessel calls at the main New Zealand ports, Maersk expected to see improved schedule reliability from next month.
However, the reinstatement of fixed slots, while a positive step in supply chain recovery, also had a downside - mainly due to the labour shortage.
Blank, discussing Maersk’s decision to discontinue its New Zealand coastal service just eight months after its introduction, called on ports to enlist additional labour to increase the number of cranes used to work ships and so improve productivity.
Maersk also called on the Government to “rethink” the supply chain to better connect the country through multi-modal transport routes to limit impacts from severe weather and other external shocks.
Maersk’s coastal service will be replaced from next month with an upgrade to its Polaris transtasman service.
Blank said the move would increase the flexibility of freight routings by steering cargo to trans-ship or hub through Melbourne. This would alleviate some demand pressure for trans-shipment cargo at New Zealand ports.
Shipping lines, which enjoyed buoyant financial earnings thanks to soaring consumer demand for goods and a shortage of space during the pandemic, are now feeling the pinch as demand ebbs and shipping rates fall. But Blank said the changes, including the axing of the coastal service, were not cost-driven. The coastal service used two vessels and 60 New Zealand crew. Maersk was in discussions with unions to identify alternative employment opportunities, Blank said.
On the flip side of the positive reinstatement of fixed berthing slots, Blank said in order to meet fixed time slots, flexibility to accommodate fluctuations in demand would be reduced. This was because, with fixed berthing windows, ports were required to cap the number of container loads and discharges to increase control of volumes.
“The key factor having a negative impact on port productivity is the continued labour shortage. Whilst we are now seeing the positive movement ... to reinstate berthing windows, labour constraints in key operation roles are holding back progress. This essentially means ports need to control the cargo exchange and impose caps on the total number of containers that can be loaded and discharged off each vessel.
“In addition, if a vessel arrives at New Zealand with delay, due to unforeseen events at overseas ports or is negatively impacted by weather, the strict berthing protocol (vessel line up) means that the vessel will need to take its own window/time slot the following week as there is limited flexibility for ports to manage ad hoc exceptions.”
Ports had also implemented a regular performance review and forecast requirement. For Maersk, this meant the flexibility to increase the load/discharge operation to adjust for changes in demand was “severely restricted”. Caps got further reduced for any operator not utilising their allocated moves over a certain period.
“To resolve this challenge, additional labour is required to increase the number of cranes used when working the ships to improve productivity. There is no easy fix to the current state of the supply chain and we expect continued disruption for the remainder of 2023, albeit in a different form,” Blank said.
There was limited availability of berthing windows or fixed time slots for additional capacity in the market to enable growth, she said.
“This limitation restricts ocean network design and limits our ability to evenly spread out schedule buffers used in the case of unforeseen schedule delays.
“The New Zealand supply chain flows are highly volatile on a port basis, with the produce export peak season running between February and June, when demand increases from export locations such as Nelson and Napier, and the import peak season during the second half of the calendar year, increasing demand to key consumer markets, Auckland, Tauranga and Christchurch.
“As such, we need a supply chain that is both stable in terms of schedule reliability and flexible in terms of cargo flows, and the ability to adjust/increase the exchange at each port dependent on demand.”
Blank said the latter ability would allow Maersk to offer more flexible cargo routings to limit the impact on exporters and importers when external events affected the supply chain.
Due to the current state of the supply chain, it took only one component to be non-operational for the entire system to be impacted, she said.
“By being able to isolate issues in one location and offer alternative products across transport modes, the overall system becomes more stable.”
Blank said the impact on Maersk schedules of recent severe weather, though short-term, was another example of “how fragile the New Zealand supply chain is”.
The resulting disruption also underlined the limited ability to “flex modes of transport for connectivity to continue to connect cargo and enable our local communities”.
While Maersk was “rethinking” its Oceania ocean network it urged the Government to also rethink the supply chain and how to enable an effective system which connected the country through multi-modal transport routes. This would mean the landside supply chain could offer flexibility when external events struck.
The Ministry of Transport told the Herald it aimed to release its freight and supply chain strategy for public consultation “in the next few months”. A spokesperson couldn’t be more definitive about the timeline. The ministry in April last year produced an issues paper to assist the strategy and invited public submissions.
Du Val reportedly owes $306m to investors and creditors, according to PwC.