Hawke’s Bay growers and seafood firms are concerned over produce getting to market as New Zealand’s supply chain to the rest of the world remains critically constrained.
Exporters are no longer able to make forward freight bookings between Australia and New Zealand as international shipping companies abandon the relatively remote and marginal trans-Tasman routes in favour of profitable routes between China, Europe and the United States.
“Our expectation remains that the disruption to the New Zealand supply chain will remain throughout the export peak season,” Maresk Oceania head of market Therese Blank said.
The company had recently made a significant investment to expand its service in New Zealand, with the addition of a seventh ship to support its Southern Star Service, she added.
However, she said the problem facing New Zealand was not just from a shortage of ships.
“We are also experiencing impact from port congestion at overseas ports, impacting on time arrivals to New Zealand ports as the vessels are delayed,” Blank said.
Minister of Transport Michael Wood said it was a “challenging international situation” that was “likely to persist for some time”.
“There are no quick or easy fixes to this… New Zealand’s experiencing it but so are other countries, and one of the particular challenges that New Zealand and Australia have is that we’re at the long tale of international supply chains.”
Ministers were working closely with key stakeholders, Wood said, and work was also underway on a national supply chain strategy.
Problem felt on both sides of Tasman
“There is so little space now that ships won’t take forward bookings,” head of industry development and policy at the The Australian Industry Group Louise McGrath said, adding worse was yet to come as peak pre-Christmas price surcharges were expected to rise from $500 to $5000, over an above the already inflated shipping costs.Australian Export Council chairperson Dianne Tipping, who was also an exporter, said she was finding it difficult to ship goods to New Zealand.
She said exporters were experiencing a cash flow crunch, as their goods were stuck in warehouses and unable to get to market.
Tipping said New Zealand and Australia were in the same boat and thought they would be better off working together to lobby their governments to find solutions.
“I think it’d be a really opportune moment for both of our governments, New Zealand and Australia, to look at how there might be some initiatives that they can work together on to try and come up with a plan to put some extra vessels in the system. But again, that’s not going to happen in a month,” Tipping said, it would take months to plan.
Export NZ executive director Catherine Beard said the problem had been building since the Ever Given, a 20,000 TEU container ship, ran aground and blocked the Suez Canal for six days at the end of March.
Challenge to find solutions
Beard said previous supply chain concerns had been on the import side with a large international spike in online shopping, but exporters were now finding themselves in an impossible situation.
“We’ve got some regions such as Nelson, who are being completely bypassed by some of the shipping lines,” she said, adding the ships that did call in were leaving behind containers with confirmed bookings.
“We’ve got cool stores that are full to the brim, not just Nelson but Hawke’s Bay.
“All the cool stores are full and we’re really getting to the point where seafood companies are going to be forced to stop fishing, and people are being told to leave onions in the ground in Hawke’s Bay.”
Big exporters able to get products to market
Beard said the situation was critical, particularly for exporters with products with short shelf lives that needed to be kept cool, while bigger companies were finding the going a bit easier.
“Look, the really big companies such as the Fonterras and the Zespris have got enough scale to charter their own ships, and they are getting on okay, but that’s because they’re big enough to be really taken seriously by the shipping industry,” Beard said.
“It’s very difficult to know what to do but we’re certainly talking to government officials about that.
“We going to put our heads together with the industry and see if we can think up some solutions and how how maybe the government can help. And if we come up with something that’s feasible we’ll certainly be advocating for it.”
Who else is being affected?
Te Mata Exports executive director Murray Tait told Morning Report “anyone needing to put product into containers to be exported” was being affected.
“We don’t feel we’re being picked on but it is having a dramatic effect and it’s slowing things right down. We’ve got full coolstores and we’re having to stop or selectively pack product we know we can ship.
“We are constipated with fruit and constantly frustrated with continual changes in shipping schedules and availability of shipping equipment.”
The issue probably started with the Ports of Auckland, he said.
Delays there could put the whole shipping network out of sync, he said.
As a result, fruit growers had produce stuck in coolstores.
“It’s well maintained at good temperature and it will hold. It will get shipped, we think, eventually, but it’s not being shipped in a timely manner and we’re not able to cope with the backlog that’s building up.”
There had been a financial cost, he said.
“We’ll be four million cartons down on export volume from last year.”
Two million cartons equated to $100 million in export income, Tait said.
Sanford chief executive Peter Reidie told Morning Report it also had stock it could not move due to shipping constraints.
“It’s a real challenge. As the world’s markets are opening up with the implementation of vaccines and the opening of restaurants and the like, the market is growing, the demand for seafood is growing, and our ability to supply that growing market is becoming challenging.
“The challenge is there’s no single factor to take into account. Ports are challenged around the world … shipping capacity is challenged, and then the routes through New Zealand … go to the bottom of the list in terms of priorities, so we have some challenges for sure.”
Fish that could not be sold was frozen and looked after, and Sanford had the ability to store what it could not ship for the foreseeable future.
Financially, there were implications of holding stock, but missing out on getting the product to market was the biggest issue, Reidie said.