Author: NZ Freight

Import:

• Rail maintenance work: Kiwirail carried out maintenance work on the rail service from Port of Tauranga to Metroport during the Easter break, which was successful with minimal impact on rail transit times.
• Ports of Auckland: The weekday container terminal and conventional wharf operations at Ports of Auckland remained busy due to low uplift activity during Easter weekend. A repeat is expected this week with Anzac Day falling on a Tuesday.
• BMSB season: The current BMSB season will end on April 30th, 2023, and the new season will start on September 1st, 2023, for shipments leaving the BMSB countries.

Overall, it seems like there are ongoing efforts to maintain and improve transportation services in New Zealand, and there are updates regarding seasonal changes in the industry.

Export: 

• Changes to Pacifica coastal service: There is no longer a service between Lyttelton and Tauranga, resulting in export cargo from Lyttelton to Tauranga being routed to Auckland and then railed to Tauranga. This will add 7 days to the transit time.
• Vessel engine failure: The Shiling 020 encountered main engine failure at Wellington Port and is currently undergoing repairs. An update on progress and forward schedule will be provided soon.
• Move count restrictions: Restrictions on move count in both Lyttelton and Tauranga are impacting on the Carrier’s ability to load export containers. Some bookings are being declined due to this limitation.

Overall, it seems like there are challenges in the export industry in New Zealand, with changes to services and restrictions on move count affecting the ability to load export containers. There is also an ongoing issue with the Shiling 020 vessel undergoing repairs.

TS Lines, the Taiwanese shipping company, has been in the news lately due to its “fire-sale” of ships. In the past few months, the company has sold nine ships, with the latest three being sold in April. This is all part of TS Lines’ strategy to streamline its fleet and shed excess vessels. The company had already exited long-haul lanes after freight rates fell to pre-Covid levels.

It is interesting to note that TS Lines has only sold feeder vessels so far. These are smaller vessels that are used to transport cargo from smaller ports to larger ones. The company has seven such vessels under construction. In addition, TS Lines has ordered six 2,900 TEU ships and five 7,000 TEU ships, all of which are expected to be delivered this year and next. The feeder vessels will be used for China-Japan routes, while the 2,900 TEU ships are intended for East Asia-Australia/New Zealand services. The 7,000 TEU ships are expected to be assigned to strings connecting East Asia with India and the Persian Gulf.

The sale of these ships is a clear indication of TS Lines’ strategy to focus on specific routes and streamline its fleet accordingly. This move is expected to increase the company’s efficiency and profitability in the long run. However, it is worth noting that the shipping industry is volatile and unpredictable, and TS Lines’ strategy could be impacted by external factors such as changes in global trade policies or geopolitical tensions.

Meanwhile, commodity currencies have been beneficiaries of the softer reserve. However, the threat of a recession in the US and Europe has taken the edge off these currencies. Commodity currencies are currencies of countries that are major exporters of commodities such as oil, gold, and copper. These currencies are typically more volatile than major currencies such as the US dollar or the Euro. The softer reserve has helped boost commodity prices, which in turn has benefited commodity currencies. However, the threat of a recession in the US and Europe has dampened investor sentiment, and this has impacted commodity currencies as well.

In conclusion, TS Lines’ strategy to streamline its fleet by selling excess vessels and focusing on specific routes is a sensible move in the current economic climate. However, the shipping industry is always subject to external factors that could impact the company’s strategy. As for commodity currencies, they continue to be volatile, and the threat of a recession in the US and Europe is a cause for concern. It remains to be seen how these factors will play out in the coming months.

Import: 

• Ports of Auckland and Port of Tauranga are working on reintroducing container terminal berth windows, but vessel arrival times are being affected by delays in other ports. However, loading and discharge are largely working according to plan.
• Auckland’s container depot congestion has improved over the past fortnight, but underlying resourcing and capacity issues remain. Oak Road Container Park stopped receiving import empties with minimal notice last week, and local carriers are still unable to achieve pre-pandemic service level agreements for dehire turnaround, although the average timespan to dehire from empty notification has improved.
• The local congestion surcharge on less than container load shipments is being reduced starting from April 1st.
• MPI applications are still taking several days to be processed, and early submission of clearance documents is appreciated to help spread the workload.
• Some MPI import health standards are being revised, which has affected the imports of fish and wood products. The company is working with MPI to get clarification and will communicate directly with affected customers as more information becomes available.

Export:

• State Highway 5, which runs from Napier to Taupo, is now open, and services have resumed via this route. No further details or context were provided.

China’s dominance in global supply chains has forced companies to adopt the China+1 approach, with Vietnam, the Philippines, and Malaysia emerging as the primary beneficiaries. However, this shift has created uncertainty in the shipping industry, with carriers pushing for index-linked contracts to protect themselves from volatile freight rates. This change has caused a delay in securing supply chains, with last-minute blanking of advertised sailings being the primary cause. While the schedules of vessels that do sail have become more resilient, shippers face the uncertainty of departures, resulting in a lot of paperwork changes until the cargo is onboard.

The maritime industry faces another challenge in the form of slow-moving regulations that have failed to keep pace with changes in the sector, particularly concerning the transport of electric vehicles (EVs) and lithium-ion (li-ion) batteries. Although the chemistry for li-ion batteries is evolving rapidly, updates to dangerous goods codes only take place every two years. The recent Amendment 42, which will require a “significant change” in the way shippers declare their cargo, has been long overdue. The amendment mandates shippers to declare dangerous goods, including li-ion batteries in EVs, in their cargo. Although Amendment 42 will be approved by the end of this year, it will not become finally mandatory until January 2026.

The slow pace of regulation highlights the need for urgent action to address the challenges posed by the increase in non-declared and mis-declared dangerous goods. While the amendment will reduce the amount of documentation required, it is essential to ensure that shippers declare all dangerous goods, including those in the miscellaneous section. The transport of li-ion batteries in EVs is an example of how the sector is evolving, and regulations must keep pace with these changes.

In conclusion, the China+1 approach has resulted in a shift in supply chains to countries like Vietnam, the Philippines, and Malaysia, but it has also created uncertainty in the shipping industry. While regulation in the sector is moving too slowly to keep up with the changes in the industry, Amendment 42 is a step in the right direction. However, urgent action is needed to ensure the safe transport of dangerous goods, including li-ion batteries in EVs. It is essential to ensure that regulations keep pace with the evolving sector to avoid any adverse effects on global supply chains.

Imports:

• Port of Tauranga and Auckland are reinstating berth windows for scheduled vessel calls, which is a positive response as schedule disruption has eased considerably on most routes worldwide.
• Auckland container depot congestion has eased over the past fortnight due to a softening of import container volumes, but underlying resourcing and capacity issues still exist. Local carriers are not yet achieving pre-pandemic service level agreements for dehire turnaround, but the average timespan to dehire from empty notification has improved.
• MPI applications take several days to be processed, and early clearance document submission is appreciated as it helps in spreading the load.
• Some MPI import health standards are being revised, affecting the imports of fish and wood products. Clarification on changes and any new documents required is being worked on, and affected customers will be contacted directly as more information becomes available.

Exports:

• Cargo moving north from the Hawke’s Bay region must transit via Fielding due to Cyclone Gabrielle, adding significant cost and impacting lead times to meet port deadlines.
• Limited freight convoys will have restricted access to State Highway 5 starting March 15th, but access is expected to be extended in the coming weeks.

The global pandemic has had a profound impact on the logistics industry, with ports and carriers worldwide struggling to keep up with the rapidly changing demand patterns. In New Zealand, this has translated into a range of challenges for both importers and exporters, from congestion at container depots to delays in clearance and processing. However, as we move into 2023, there are also signs of progress and opportunity, as we see the reinstatement of berth windows and some relief in congestion.

On the import side, the news from the Port of Tauranga and Auckland is positive, with both ports transitioning back to reinstating berth windows for scheduled vessel calls. This is an important development, as it provides more certainty for exporters and importers who rely on these ports for their business. While there are still underlying resourcing and capacity issues, the fact that schedule disruption has eased considerably on most routes worldwide is a welcome sign of progress.

However, there are still challenges to be addressed, particularly in terms of congestion at container depots. While there has been some relief in Auckland over the past fortnight, this has been partially due to a softening of import container volumes. The underlying resourcing and capacity issues are still in evidence, and local carriers are not yet able to achieve pre-pandemic SLAs for dehire turnaround. Nonetheless, the average timespan to dehire from empty notification has improved, and this is a positive step forward.

Another ongoing challenge for importers is the processing of MPI applications. We continue to see delays of several days, and it is important for all parties to work together to streamline this process. Importers who are able to get clearance documents to their logistics providers early can help to spread the load and ensure smoother processing times.

On the export side, the impact of Cyclone Gabrielle has been significant, with cargo moving north from the Hawke’s Bay region now required to transit via Fielding. This has added significant cost and impacted lead times to meet port deadlines. However, there is some hope on the horizon, as State Highway 5 is set to open to limited freight convoys from March 15th. While there is restricted access to this route, it is expected that access will be extended in the coming weeks, which could help to alleviate some of the pressure on exporters.

In addition to these challenges, there are also ongoing revisions to MPI import health standards, particularly in relation to fish and wood products. We are working closely with MPI to get clarification on changes and any new documents required, and will communicate directly with affected customers as more information becomes available.

Overall, the logistics industry in New Zealand continues to face a range of challenges and opportunities in the wake of the pandemic. While there are ongoing issues with congestion, delays, and processing, there are also signs of progress and improvement, particularly in the reinstatement of berth windows and the opening of State Highway 5. By working together and continuing to adapt to changing circumstances, we can ensure a more stable and reliable logistics network for all parties involved.

Imports:

• Cyclone Gabrielle has caused widespread disruption to air and sea freight operations, including Auckland airport, Auckland port, Port of Tauranga, Napier, container yards, freight facilities, rail, road carriers, and interisland ferries.
• Port of Tauranga is experiencing heavy vessel congestion, leading to a spike in last-minute vessel diversions, delays at anchorage before being allocated a berth, and delays in general. Expect delays.
• Napier Port sites will remain closed until midday on Thursday, 16th February.
• Auckland container depot congestion is causing delays in the rotation of mainly import containers. The main centers, especially Auckland, are operating at an overcapacity level, and depots have either shut altogether for lengthy periods or greatly restricted the number of acceptance bookings issued. Trucking companies are uplifting empty containers from importers’ premises and then hubbing the containers called in until they can obtain an active acceptance with a matching booking, many days later. The backlog of hubbed containers waiting to be dehired is significant.
• While international freight rates have largely progressively reduced, the long-term lack of investment in infrastructure and human resourcing in New Zealand will continue to be a major impediment to the efficient port, rail, landside movement of freight locally.

Exports:

• Tappers has implemented a new procedure that requires shippers/exporters to clearly label all cargo on all four sides and attach a copy of the Booking Confirmation to the outside of the cargo for delivery to avoid the potential of mislabeling and/or receiving the incorrect freight. Failure to comply with these requirements will result in the cargo being rejected.
• Cyclone Gabrielle has caused havoc with road, port, and container depot closures across the North Island.
• Congestion at the Port of Tauranga had worsened prior to the cyclone, with wait times of 14 days. Wait times are expected to escalate to 16-17 days, and carriers are diverting vessels from Tauranga or omitting. There will be disruption for all services in the coming weeks. Departure and close off dates are changing quickly, so it is essential to monitor Port websites closely and aim to have containers on port at the first opportunity.
• Equipment shortages continue for Hapag Lloyd, ANL, & CMA CGM & Maersk, and Nelson, Port Chalmers, and Napier are the most impacted.

The COVID-19 pandemic has had a major impact on global supply chains, leading companies to adopt a “China Plus One” strategy that diversifies their operations outside of China to anticipate future volatility. Countries such as Thailand and India are seeing an influx of companies establishing regional manufacturing hubs to ease their dependence on a single supply chain. This shift in logistics design from just-in-time to just-in-case strategies helps maintain inventories and supply lines, however, 90% of respondents still report higher logistics costs than in 2020.

Despite the current market forecast not being as favorable as the previous month due to inflation in Australia, carriers do not intend to pull capacity out and rates are expected to remain at their bottom level until the beginning of Q2.

The return to “supply chain normalization” has resulted in an estimated surplus of 5 million TEU of containers for the container liner industry, causing equipment storage costs to soar as freight revenues plummet. The surplus of containers has caused the cost of a new standard 40ft high-cube container made in China to decrease from $6,500 at the peak of demand to less than $3,000.

In conclusion, the COVID-19 pandemic has brought attention to the importance of diversifying supply chains and reducing dependence on a single source. While the return to normalization has caused some challenges for the container liner industry, it highlights the need for companies to continue finding ways to streamline and optimize their supply chain operations.