Import frustrations and costs rise for NZ businesses as global freight jam worsens

Container shipping congestion forecast to be with us for some months yet. Photo / File

Auckland retailer Tony Gallagher has just six pallets of flat pack furniture in his warehouse instead of the usual 70 at this time of the year - and last weekend he lost several sales because he didn't have the stock the keen shoppers wanted.

The owner of small Otahuhu business Sofas and More is feeling the pinch - and embarrassment - of the import freight gridlock.

He imports about 45 containers a year from Malaysia and China and said it's not pleasant having to tell customers their pre-sold orders have been delayed - again.

It's not just retailers and small businesses feeling the freight crunch.

Mainfreight is a big NZX-listed global logistics and transport company, and it's just had some very bad news.

Managing director Don Braid has been advised by a major shipping line it will not accept any new space bookings from China to Europe until some time in the new year.

"We've got 350 containers sitting on the wharf in Shanghai waiting for ships to go north to Europe. You can forget about those until January.

"If you think we've got issues here in New Zealand which are frustrating and upsetting for customers and retailers, the same is applying round the world right now."

Mainfreight boss Don Braid says the world's supply chains are jammed up. Photo / File

What is upsetting New Zealand import freight customers and retailers with empty shelves in the lead-up to the holiday season almost as much as the delays is the spiralling costs of the shipping congestion.

Bryan Johnston, managing director of Auckland-based First Global Logistics, said shipping lines have raised their rates by 400 per cent since July with more rises planned. On top of this is the Auckland congestion surcharge they've imposed since ships have been waiting 10 days at the port to be unloaded. The charge can be up to US$500 a container. This is worn by the importer and, inevitably, passed on to consumers.

Due to Covid-19, importers have lost the equivalent of 600 containers a week of aircraft space for urgent Christmas freight, Johnston said. The space shortage is acute for imports from north Asia, particularly China.

Braid attributes the global congestion to lack of international manufacturing capability because of Covid and unprecedented demand for goods as consumers spend at home instead of on travel. Others blame the Auckland port for failing to see the import surge coming and staffing up for it, and shipping lines for cancelling services and delays when the pandemic struck.

Auckland Council-owned Ports of Auckland has attributed the severe congestion to a shortage of stevedores - which means only five of its eight big gantry cranes are operating in any 24-hour period - Covid disruption on shipping, and the hangover of previous labour strikes at Australian ports.

However it has also been implementing for four years an automated system, the cost of which is being kept from Auckland ratepayers. It's believed by industry observers to be nudging $400 million and is still not operating smoothly.

Ships avoiding Auckland have been unloading at the Port of Tauranga, which is also handling its busy export season. Imports dropped there have to be trucked or railed back to Auckland, causing further congestion in the supply chain of the so-called "golden triangle" of Tauranga, Waikato and Auckland.

"Ports of Auckland haven't helped themselves at all by not preparing for this period and that is frustrating everyone but it's only one part of the supply chain congestion," said Braid.

Overseas manufacturers adjusting to Covid have not been able to keep up with the surge in consumer demand and orders, shipping companies and airlines are unable to take the volumes and ports could not keep up, he said.

He and Johnston praised Whangarei's Northport for trying to help get Christmas stock on to Auckland shop shelves by accepting at short notice the biggest container ship it has handled. It will berth on Sunday, but it's a small container port so boxes won't be available until at least Wednesday. Johnston is particularly pleased about getting a container of Christmas toys that he'd had given up hope on which will now reach its intended charity.

But not everyone is pleased at the prospect of up to 2000 containers rolling out on the road to Auckland next week. They're forecasting high transport costs, truck congestion, slow unloading and delivery because Northport has only two mobile cranes, and a shortage of trucks. There is no rail freight service south.

Freight forwarder Owen Embry estimates it will cost an extra $1200 per 40-foot container for transport from Northport to Auckland. The round trip will be five hours with an anticipated truck queue at Northport, he said. At two containers per truck per shift, 45 trucks per day running continuously will be needed to clear the containers in 10 days.

Johnston reckons it will cost an extra $1300 per 20-foot container to clear the ship's load from Northport.

"Times 2000 containers - 20 foot and 40 foot - that will be a cost to importers of at least $3 million plus the congestion on the road from Whangarei to Auckland."

Road Transport Forum chief executive Nick Leggett said the infrastructure isn't in place to support imports at Northport.

"People think moving stuff around is easy and Northport's bravado demonstrates that to some degree. The supply chain is too fragile to play around with and take a chance on."

He is looking to new Transport Minister Michael Wood to get to grips with the supply chain challenge in the golden triangle.

"[It's] a big chunk of the country and the economy depends on it effectively moving. We have to keep our eye on it and ensure everything that can work is able to, and we are anticipating problems before they arrive."