Concerns about skyrocketing freight costs and price hikes are rising. Photo / George Novak
Concerns about skyrocketing freight costs and price hikes are rising. Photo / George Novak
Consumers and business owners are being warned that "container chaos" in international shipping could lead to lengthy delays for imported goods and price hikes.
Skyrocketing shipping charges have seen the cost of shipping containers jump from $1800 in January to upwards of $10,000 now.
Industry experts say every imported productinto New Zealand will face price hikes and shoppers are being warned of delays to Christmas and beyond.
The trend has raised concern for some industries - including the building and construction sector - that rely heavily on materials from overseas.
Merchants say lead-in times for flooring, structural timber, outdoor timber, decking, fencing cladding, fibre cement, fastenings, adhesives and sealants has created challenges and economists say it could affect housing targets.
An ANZ Research Insight Report said the "container chaos" at ports meant the impact of freight disruptions was being felt by the export sector - in particular, smaller exporters.
The report said estimates of when global shipping routes and "skyrocketing" costs would return to "normal" kept getting pushed out.
"Shipping companies are currently making abnormally high returns and are flat out, so they have no incentive to reduce prices to gain market share."
Tauranga Hardware and Plumbing managing director Craig McCord. Photo / NZME
Tauranga Hardware and Plumbing managing director Craig McCord said people "did not realise but they soon will" how the price of freight could affect the price of jobs.
"In January, a 20-foot container cost about $1800 - now, to bring in that same container, it's $7000 from Asia and if you want it a bit quicker it's up to $10,000."
McCord said the industry had not been hit as hard as building and construction but a bonding product used for PVC was"getting very difficult to find globally".
Now some sectors were on tenterhooks as products became harder to source due to stockpiling.
"If PVC stops, everything stops. It hasn't happened and I'm not saying it's going to but everyone is kind of thinking to themselves it could."
A Fletcher Building spokeswoman said longer lead times on products like steel re-bar and spot problems in fastenings and adhesives and sealants were starting to emerge.
The main supply challenges were still in categories such as structural flooring, structural timber, outdoor timber (decking, fencing and retaining), and cladding [pine, cedar and fibre cement], she said.
"It seems likely that these supply constraints will be very tight until at least Christmas and probably beyond."
Bunnings New Zealand head of merchandise Cameron Rist said a rise in new-home builds and renovations had created a challenge for the entire industry.
Demand was particularly strong for structural timber.
"We're working closely with our suppliers and trade customers to forecast demand for structural timber and plan earlier in the build process to help manage stock as best as possible.
"While the current demand patterns are putting pressure on some raw timber costs, we purchase products from a large number of suppliers and always aim to offer our customers the lowest prices possible."
Retail NZ chief executive Greg Hartford said the cost of freight had more than doubled since the Covid-19 pandemic and some firms were paying substantially more than that.
Rates continue to rise and costs would be passed on to customers.
"At the moment we're seeing less discounting but we will see prices going up over the coming months.
"Apart from the costs of freight, we're seeing massive increases in the costs of employing staff - plus there is a shortage of workers, which is making it hard to get employees."
Rotorua Chamber of Commerce chief executive Bryce Heard said he was aware that there had been considerable disruption to sea freight and the delivery of imported products was seeing significant delays.
Items like furniture, machinery, vehicles, parts, computers and appliances are often facing weeks of delivery delays.
"Ironically, it has come at a time when domestic consumers are spending more freely, with no international travel available for the use of discretional cash."
Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / NZME
Tauranga Chamber of Commerce chief executive Matt Cowley said most customers had high expectations and wanted instant gratification so they would shop around for whoever had the least delays.
Talk that some cargo ships may be avoiding New Zealand due to unloading delays at ports was a matter of national concern, he said.
"New Zealand businesses are constrained by labour shortages and supply chain disruptions. It must be wearing down teams who are short-staffed and are constantly dealing with new challenges."
Kiwibank senior economist Jeremy Couchman. Photo / Supplied
Kiwibank senior economist Jeremy Couchman said the global supply chain issues meant more expensive shopping bills for households.
Small Kiwi exporters were also finding it difficult and increasingly expensive to ship products offshore, while the construction industry could also slow down as a lot of the materials were imported.
David Corstorphine, from Jock Freight International Ltd, said he estimated shipping rates had increased by 25-30 per cent - and possibly more in some cases.
Shipping rates were calculated by the shipping lines, he said.
These were dependant on the number of vessels using which ports, transit times, fuel rates at the time of shipping and a congestion charge.
"The shipping lines are now omitting quite a number of ports because it holds ships back from meeting their original estimated times of arrival."
Containers at the Port of Tauranga. Photo / George Novak
A Port of Tauranga spokeswoman said vessels would avoid unloading at some congested ports but it was not aware of ships avoiding New Zealand altogether.
There was widespread disruption throughout the international shipping network, primarily due to Covid-19, namely the impact of cases on production/services as well as changes in consumption habits.
"KiwiRail has given us extra trains so there are no significant delays in cargo handling at Tauranga at present, but vessels are still arriving off schedule. We are processing them as they arrive but some are having to wait briefly at anchor.
"Importers and exporters have been incredibly understanding and patient, as they realise the situation is out of our control. It has been very frustrating for all involved, including our team."
Matt Ball, from Ports of Auckland, said its container terminal was running at or over 100 per cent capacity most of the time.
This week it was able to increase capacity by more than 1000 20-foot equivalent units, which would help reduce congestion.
