Mike Knowles, NZ Council of Cargo Owners chairman, says ships have to wait too long at some New Zealand ports, and productivity should be improved.
Mike Knowles, NZ Council of Cargo Owners chairman, says ships have to wait too long at some New Zealand ports, and productivity should be improved.
Shipping rates for importers and exporters are on the rise again as a cargo sector leader warns supply chain operators need to lift their efficiency game to counter offshore shocks.
New Zealand Cargo Owners’ Council chairman Mike Knowles said shocks like the current Red Sea security crisis, thePanama Canal water level issue and the overriding impacts of climate change “will keep coming”.
While our remote supply chain had no control over global events, its internal participants - ports, rail system, road networks and cargo owners - needed to be operating more efficiently to meet the effects of the shocks, he said.
Rising shipping rates and cargo delays aren’t the only results of vessels having to divert from the Red Sea and Panama Canal around the Cape of Good Hope.
Knowles said vessels were having to wait “too long” at some New Zealand ports because berthing productivity had yet to return to pre-pandemic levels.
He questioned whether the country had too many “main” ports for a population of five million. New Zealand has 13 ports considered to be “internationally connected”. The top five are considered by the industry to be Tauranga, Auckland, Napier, Wellington and Lyttelton.
Knowles said a more efficient network could be two major ports in the North Island and one in the South Island, feeding cargo to other ports on smaller vessels.
Container shipping giant Maersk told the Herald container returns are slower, leading to a negative impact on global container stock.
For New Zealand, heavily reliant on refrigerated and food grade containers, this means container availability at demand locations can be squeezed, said My Therese Blank, regional head of market, Oceania.
The Red Sea security situation was increasing rates between New Zealand and Mediterranean markets, while strong pre-Chinese New Year demand had resulted in rises in freight rates between New Zealand and China, Blank said.
“The new [vessel] build phasing in to the global container shipping market is currently being absorbed by the longer lead time as vessels are diverted around Cape of Good Hope and we are seeing global freight rates rebounding again, post the normalisation of freight rates in the Q2-Q4 2023 [post the pandemic when freight rates were high],” Blank said.
Knowles said New Zealand exporters to countries in or near the Middle East were experiencing shipping rate rises of 30-60 per cent.
My Therese Blank, head of market, Maersk Oceania.
The Red Sea and Panama Canal issues meant a two-week increase in container ship times as they detoured around the Cape of Good Hope, which meant containers “were not where they should be” at the right time, upsetting the supply chain and resulting in product shortages.
Shipping lines were also imposing fuel and time surcharges, Knowles said. Before the two crises, shipping rates had eased quite significantly.
Big New Zealand exporters and importers would be on 12-month set-rate contracts and “would be okay” for now, but smaller shippers would feel the impact of the two crises, he said. Many were looking for shipping services that didn’t rely on the drought-hit Panama Canal.
“The canal works okay if you’ve got a booking but if not, or if you miss your time, it’s at least a week delay. The forecast for the rain season in early May looks promising, but could this happen every couple of years now?
“As a country we need to be focused on what we can control in our infrastructure. The pressure on the supply chain has eased because the economy is at a low point with imports well down by 10-15 per cent on two years ago. But as Maersk says, port productivity is not where it needs to be.”
Maersk’s Blank said the supply and demand driving ocean freight rates was not limited to vessel capacity, but also to the container fleet.
“Given the longer sailing distances where vessels are diverted on the Cape of Good Hope we also experiencing a high demand for empty containers.
“Imbalance of flows is a key issue facing the New Zealand supply chain and we have a high reliance of empty container supply to meet the agricultural export demand requiring refrigerated and food grade containers.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
