Container chaos, delays at NZ's ports

Tauranga - New Zealand is facing a container port crisis which is impacting on primary producers

Exporting and importing goods is extremely challenging at present due to freight delays and elevated freight costs.

It is not clear when the congestion in the global shipping industry will ease, but the situation is likely to continue well into 2022.

Skyrocketing shipping costs mean a lower proportion of value is being returned to New Zealand primary producers.

Over the past couple of decades supply chains have become increasingly reliant on having goods delivered just-in-time, effectively reducing the cost of holding inventory.

But for this to work, global freight networks need to be operating in a reliable and efficient manner, which is not the case in today’s covid today.

Global shipping networks were disrupted by the arrival of the pandemic, which resulted in ports and freight distribution systems being compromised due to the health risks to workers.

This initially resulted in many of China’s port operations being significantly hampered early in 2020, with trouble then spreading to ports and ships elsewhere as covid made its way around the world.

Many global ports were shut down temporarily or operated at below capacity for a period of time, which directly impacted the loading and unloading of ships.

But as ports have started operating at full capacity again, there’s been a huge backlog to clear, as well as strong demand that they’ve not been able to catch up.

This has left businesses facing massive shipping delays at ports throughout the world.

Disruptions have continued to plague the global shipping industry. In late May, the port of Yantian in Shenzhen province, southern China, was closed for several days due to a covid outbreak, and then operated below capacity for nearly a month.

Yantian is the world’s third busiest port, behind Shanghai and Singapore, and while its operating capacity was compromised it’s estimated that nearly 300 ships, carrying approximately three million container equivalents, simply sailed on to other ports.

This in turn put additional pressure on nearby ports. While the Yantian port is now back operating at full capacity, it is estimated it will take another 80 days to clear the backlog of approximately 700,000 containers to be unloaded.

This level of disruption is similar to that caused by the Ever Given ship blocking the Suez Canal for six days in late March.

And this kind of thing just keeps happening, generating further increases in the cost of shipping goods around the world.

Global trade is forecast to lift by 8 percent in 2021 and a further six percent in 2022, suggesting there will be no let-up in demand for shipping any time soon, the ANZ bank economic unit says.

Tauranga is best equipped port for larger vessels and has increased its share of container traffic in and out of NZ.

Last year, 42 percent of containers went through the Port of Tauranga. It is the only NZ port that can service larger ships with more than 6000 containers.

The increase in the size of the ships visiting New Zealand has not compensated for the sharp drop in the number of ships servicing the ports.