Shipping capacity between NZ and key north Asian markets fell by 35 per cent in the month of March alone. Photo / Getty Images
Shipping capacity between NZ and key north Asian markets fell by 35 per cent in the month of March alone. Photo / Getty Images
The world's shipping services and supply chains have been thrown into disarray by the Covid-19 pandemic.
In New Zealand's case, shipping capacity between here and key north Asian markets fell by 35 per cent in the month of March alone after much of China shut down.
Kotahi - New Zealand'sbiggest containerised freight manager - said it was well-placed to help exporters get product out of the country as supply chains struggle to adjust to the shutdowns here and around the world.
Chief executive David Ross said the ripple effect of the outbreak in China and the country's moves to contain it meant it would take months for shipping services to adjust.
The Auckland-based firm - a joint venture between Fonterra and Silver Fern Farms - has close links with Danish shipping giant, Maersk, and the Port of Tauranga. It manages about a third of New Zealand's containerised export freight.
Ross said he understood some exporters were struggling to get enough containers and shipping space out of New Zealand - much of that arising from the disruption caused by the initial outbreak and containment measures introduced in China.
Over January and February, the issue as all about getting product into China as containers were getting stuck at ports or warehouses in the PRC. That in itself created a ripple effect, Ross said.
When China went into lockdown itself, its manufacturing sector was not producing and internal supply chains were not working.
With limited freight coming out of China, the shipping lines were quick to trim back capacity, which meant the number of ships moving between China and other markets was cut back dramatically.
Kotahi chief executive David Ross. Photo / Supplied
"The impact of that was that all the containers that have gone into China are not coming back out the other way," Ross said.
"New Zealand exporters are facing significant supply chain challenges today and are not immune to the ripple impact from global supply chain movements that we will see in the months ahead," he said.
"We expect the majority of New Zealand's essential food exports will become entangled to some extent in a creaking global supply chain," he said.
The pandemic was hitting global trade flows, with shipping lines quickly adjusting capacity to rapidly diminishing demand to minimise their losses, this also has a material impact on the flow of containers.
China last year became the biggest export market for New Zealand meat, partly in response to the African swine fever outbreak there that decimated the country's pork industry.
"One ripple effect of China's shutdown in February, is the reduction in containers coming back out, including higher than usual numbers of refrigerated containers that had gone into China to satisfy protein demand post the swine fever issue," Ross said.
"This impacts the ability to supply containers for the next wave of exports."
While there had been a reduction in shipping capacity of about 35 per cent between here and North Asia - this was mild compared to some trade lanes, he said.
Ross said, the key for New Zealand exporters was to navigate the opportunities and trade flows.
"Exporting out of places like Europe and North America is extremely problematic at the moment, for both securing shipping capacity and container availability, so relatively speaking it creates opportunities for New Zealand food exporters who compete with suppliers in these locations."
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Ross said Kotahi had the partnerships, the ocean freight networks, and the planning expertise to ensure capacity and container supply.
With the horticulture and meat sectors now in full swing, exporters can expect ocean freight capacity and container supply challenges for the next three months, with many exporters exposed to some level of cost increase from what they may have expected, Ross said.
"What we are saying to them is that we have got capacity in the supply chain set-up to cope with these sorts of circumstances."
