The current status of supply chain in New Zealand is in a dire state and, as has been mentioned in previous newsletters and general communications, is due to several factors. These factors are compounding to create further severe disruption to the supply chain. Our Geneal Manager in New Zealand, Tom Pritchard, gives this update.
We are continuing to experience delays on sailings, shortages of equipment and congestion within ports in New Zealand. The issues are global with all major importing countries continuing to experience backlog and congestion and that is creating an ongoing cycle of difficulty within New Zealand.
Various sources report that global schedule reliability has been in free fall since August this year. Sea Intelligence Maritime analysis states that globally, carrier on-time performance in October reached a record low 52.4 percent. That was down 3.6 percentage points from September and 26.7 percentage points from October 2019.
The average vessel delay globally in October was 4.86 days, up from 4.11 days in October 2019. The above is a global average and we are seeing many examples of greater delay to vessels entering and departing New Zealand.
The main pressure at the moment is cargo into and out of New Zealand via Auckland. There were 11 ships queuing in the Hauraki Gulf late last week. The challenges here have been well publicised across the media. As per this article from the NZ Herald, steps are now being taken to alleviate this pressure and get port operations back to normal (Ports of Auckland hiring more staff to help with 'unprecedented' demand as ships wait eight days before being processed).
The Trans-Tasman trade is very much under pressure, we have shipping lines rolling bookings and even in extreme cases cancelling bookings all together. Shipping lines are taking extraordinary steps to clear their rollover backlog and that is impacting on space through to end of January. In positive news, bookings to Asia and further afield are moving without too much disruption.
Import trade is not faring much better. We are finding that with planning that space and equipment is starting to free up from North Asia to New Zealand but then with scheduling issues and delays once in New Zealand waters, reliability is still a problem. South East Asia is also being impacted by space and equipment challenges. With this increased demand for space, FAK (freight all kinds) rates have hit record levels and shipping lines are pushing General Rate Increases with alarming regularity and will continue to do so into the new year.
We are seeing carriers take unprecedented steps to assist with the Auckland Delays.
The Constantinos P calling Northport (under carrier Force Majeure) is a first for that size vessel and has improved arrival time in New Zealand. However, there are challenges on the local supply chain infrastructure with 1300 containers having to move via road from Marden Point down to Auckland. An extra 2600 truck trips. This of course had also brough increased cost to the consignee.
There is also increased pressure on the final step of the process with empty container parks in Auckland at full capacity. We are in constant discussions with the Shipping Lines to get space for de-hires. This will increase risk of detention.
We are moving into a critical phase and what happens before Chinese New Year, and the impact that will have on space demand and then how New Zealand import infrastructure copes with the arrivals, will determine where we are up with this crisis and give a clear indication on improvements. We are potentially seeing the aftereffects of this through to March, with June as better understanding of a new normal.