Red meat sector battles on
It's a bloody tough year for sheep farmers, but the worst may be over, and the future looks optimistic.
The latest report by The World Composite Container Index shows that container rental costs have risen 292% over their 2020 value.
In New Zealand, extended delivery times has seen goods being delayed with some large items - like tractors and harvesters - pushing out to lead times of 9 to 12 months. Much of this delay can be attributed to factors such as up to 4 million "misplaced" containers around the world, service cancellations and boats being held up at ports.
In the case of the latter, freight forwarders Kuehne and Nagel reported that during September, 353 container ships were stuck trying to unload at ports around the world. It went on to suggest that a return to normality could take 12 to 18 months.
While congestion at the Ports of Auckland was causing hold-ups at the start of the year, since around March, import dwell times (the time taken to berth and unload), was around 1.94 to 3.4 days. However, the recent Auckland lockdowns has meant that freight warehouses and distribution hubs had been largely closed and holding up the supply chain - particularly for non-essential goods.
Of greater concern to the NZ economy is the shipping schedule reliability index. This has slipped to an all-time low of 6%, from 80% prior to the pandemic. This has resulted in some ships arriving into our territorial waters choosing to make only one drop off - rather than servicing coastal ports - to make up time.
This has compounded the problem of mislocated, empty containers, which in some cases has seen "ghost" container ships travelling empty to the southern hemisphere, just to pick up empty containers.
Coastal shipping in NZ has also changed over the last three decades, following deregulation, which allowed overseas vessels to visit ports en-route to their destination. In 1994, there were 34 ships servicing the regional ports of NZ. Compare that today, where there is only one - the Moana Chief.
This has led the Government, in September, to announce a $30 million initiative over three years to support the sector. However, as of now, there's been no detail as to how this will work.
While encouraging coastal shipping has merit over the long term, the need for a short-term solution means it may be better to charter smaller container ships to move any backloads - as building or commissioning any vessels will take several years.
Meanwhile, a recent study by the World Bank and IHS Markit shows that Australian container ports were operating inefficiently and well below international best practice - even before the pandemic disruption. The study ranked Australia's largest container ports, Melbourne and Sydney, in the bottom 15% and 10% respectively of the 351 global ports in the study.
In 2019, the median in-port time for container ships visiting Australia was three times longer than Japan, twice that of China, and 50% longer than Singapore or New Zealand.
This had led to some shipping lines withdrawing services from Australia - before Covid-19 had arrived - and calling for that country to take decisive action to remain an attractive destination for global shipping lines.
The report also looked at how systemic industrial relations issues and restrictive work practices have further disrupted the supply chain, causing congestion and delays in Australia. Data shows average idle hours - the length of time a ship spends in berth - at Port Botany increased from 11.9 hours pre-pandemic to 21.2 house in 2020-21.
It is reported that things have become so bad at this port that some shipping lines are skipping it entirely as it has become commercially unviable.
