Freight forwarders riding the tiger’s tail NEW ZEALAND’S HEAD START ON THE GLOBAL COVID RECOVERY IS BEING HAMPERED BY THE LONG TAIL OF GLOBAL LOGISTICS ISSUES, WHICH WILL CONTINUE TO PLAGUE US he stuttering restart of global manufacturing, and shipping, and fluctuating demand in other big markets will continue to have a whiplash effect on the general freight market in Australasia, according to Famous Pacific Shipping’s New Zealand country manager, Debbie McKenzie. She says “a perfect storm” of currents have come together in the wake of Covid to drive some shipping costs up 700 to 800 per cent. That kind of price increase is, on the face of it, hard to understand. It would suggest something of the order of a doubling of demand for limited shipping resources, yet the world is far from operating back at full throttle, while the shipping capacity that operated pre Covid is, at least in theory, still there. Debbie reports that shipping companies say their capacity is coming back online, and yet when you try to book it’s just not there; not in the time frames we were used to.
LONGER LEAD TIMES Her advice to stock managers or importers is to get their orders in as early as possible — up to weeks earlier than they have in the past. That should avoid stock shortfalls and give them the best chance of operating with minimal disruption. One reason for the capacity constraints, she says, is that the world expected a more severe economic decline. Shipping movements were interrupted due to the Covid constraints and capacity was moth-balled. That meant that the unexpected resurgence of demand, especially in
Auto Channel Issue #35 May 2021
Australasia, quickly resulted in a backlog. And while shipping capacity might be recovering, manufacturing is still out of sync. She gives the example of pump manufacturers in Taiwan. While Taiwan has been also largely Covid-free, those manufacturers are still unable to supply product because they can’t get seals or other components made in Japan. Even when ships make it to port, they can’t always disembark cargo, due to port delays around the world. She says a lot of ports have been grappling with a host of issues, such as the well-publicised challenges slowing throughput at the Ports of Auckland. That in turn has led to a
global shortage of containers. “It’s rarely just one thing that causes a problem,” says Debbie. “As I say, it’s a perfect storm.” In case you were wondering, a lack of air freight has not rebounded on sea freight as much as you might expect. Debbie says that airlines have maintained much of their freight capacity even though the passenger market collapsed.
AMAZING RECOVERY However, the lack of overseas travel has meant that more New Zealanders are spending locally, which has, for example, seen the local new car market surge. The strength of the economic rebound in New Zealand and Australia has been “amazing” and has confounded predictions. Debbie says the freight-forwarding industry had previously expected to see imports return to normal levels in March, April, and May. “Yet so far we haven’t seen any significant changes since Chinese New Year [when production always drops]. People are now saying it [the return to normal] may be the end of the year, but some commentary predicts 2022 or 2023.”
IMPORTED CARS BY YEAR OF MANUFACTURE (2009–2018)