No end in sight to shipping delays

Hamburg Sud's NZ general manager Simon Edwards told Rural News that the global supply chain is a complex system at the best of times, which is being compounded by the Covid crisis. He says there are multiple factors contributing to shipping delays - including congestion at the Ports of Auckland and strikes in Australia.

Edwards says all these factors are affecting the shipping of NZ primary products to world markets. He adds that Hamburg Sud is fully committed to servicing the NZ market and in the past nine months has increased the number of its vessels calling at our ports to alleviate some of the supply chain congestion.

"As well as investing in increasing our container pool, we have also invested in 'extra loaders' both to evacuate low grade containers from Ports of Auckland and alleviate depot congestion," he told Rural News.

"We have also been positioning empty reefer and food grade quality containers into the country to support our agricultural exports."

Edwards says Hamburg Sud is well aware of NZ's dependency on shipping to get its primary exports to key markets in a timely manner. He says they've made significant investments in new ships to increase the number of containers in circulation - an issue that has been identified as a major one by NZ exporters.

"We launched the FERN service back in March, which adds significant flexibility to our network and strengthens our product to and from Nelson and Timaru," he explains. "In addition, on the SENZ service, connecting New Zealand to South East Asia, we have added on vessel to the rotation to increase schedule buffers to absorb some of the schedule delays."

Edwards says his shipping line will continue to focus on communication with their customers to keep them informed about the current supply chain situation, both in New Zealand and in the Asia Pacific region. He says they have also changed the way they implement vessel contingency plans with increased lead time and a higher focus on structural contingencies to empower customers and enable them to improve their supply chain planning and cargo flows.

There has been much talk in the primary sector about rising freight costs. Edwards says these are highly dependent on the supply and demand in their industry, like many others, and this has always been the case over the years.

"As a shipping line we are also incurring additional operational costs as a result of contingencies and schedule delays, resulting in increased bunker spend to recover delays, significant increase in chartering cost for additional vessels and additional costs to enable alternative cargo plans," he adds. "We have seen an increase in the spot rates due to the negative impact on space availability coupled with the strong demand."

Edwards says it's hard to predict how long the disruptions will continue given the complexity of the global supply system. But says - based on the current market dynamics and continued impact from Covid-19 - he expects the current situation to last well into 2022.