Category: Uncategorized

The OECD’s latest economic outlook paints a mixed picture for the global and New Zealand economies.

 

Global Economic Outlook:

Slow Global Economy: The OECD forecasts a slow global economy in 2024. Despite a projected slowdown, there is an expectation that it will avoid a “hard landing.”

Global Growth Projection: The global growth is expected to be 2.9 percent in 2023, slowing to 2.7 percent in 2024, with a slight improvement to 3.0 percent in 2025.

 

New Zealand Economic Outlook:

Below Potential Growth: In contrast to the global outlook, the forecast for New Zealand is less optimistic. The OECD projects the New Zealand economy to grow by just 1.3 percent in 2024 and 1.9 percent in 2025.

Comparison with Potential Growth: The projected growth for New Zealand is substantially less than its potential economic growth rate, which was assessed to be 2.9 percent during the same period according to Treasury’s Pre-election Economic and Fiscal Update 2023.

 

Monetary Policy in New Zealand:

Cash Rate Decision: The Reserve Bank’s Monetary Policy Committee held the cash rate steady at 5.5 percent.

Factors Impacting Decision: The committee highlighted that demand growth had not eased as much as anticipated in the first half of 2023, partly due to stronger-than-expected population growth. While this eased supply constraints, there is a concern that it might increase the risk of inflation remaining above the target.

Potential for Rate Increase: If inflationary pressures were to be stronger than anticipated, the committee noted that there might be a need for an increase in the cash rate.

 

Overall Implications:

The global economic slowdown and New Zealand’s economic performance below its potential growth rate pose challenges. The monetary policy decisions, including the potential need for an interest rate increase in response to inflationary pressures, reflect efforts to balance economic stability.

These forecasts and policy decisions indicate the importance of monitoring global economic trends, managing inflationary risks, and adapting monetary policies to ensure economic resilience in the face of evolving conditions.

The challenges facing the container shipping sector, with decreasing volumes, oversupply, and falling rates. Key indicators like the Drewry World Container Index and Xeneta Shipping Index point to a concerning trend for carriers, with long-term contracted rates continuing to decline.

The 40% drop in the Drewry World Container Index compared to the same week last year and the Xeneta Shipping Index falling an additional 4.7% in October raise alarms about the financial health of carriers in the ocean freight shipping market.

Xeneta’s warning about 2024 being even more challenging for carriers than anticipated is notable. The observation that older contracts, signed when rates were higher in 2022, are masking the true severity of the situation is a crucial insight. As these older contracts are replaced in early 2024, carriers may face the full impact of the current weak market conditions.

The anticipation of new contracts being signed at significantly lower rates in 2024 raises concerns about substantial financial losses for carriers. This is particularly troubling, considering that four major carriers have already reported significant financial losses in the third quarter of 2023, attributing the decline to rates rather than volumes.

The industry’s acknowledgment of the difficult period ahead aligns with the broader economic challenges and uncertainties that affect global trade. It will be essential for carriers to navigate these challenges strategically, possibly through cost-cutting measures, operational efficiencies, or exploring new business models to ensure sustainability in the long run. Additionally, regulatory and industry initiatives aimed at addressing environmental concerns, as mentioned in the previous context about COP28, could play a role in shaping the future landscape of the shipping industry.

Major CEOs of global shipping companies taking a proactive stance on addressing the maritime industry’s greenhouse gas emissions during COP28. The joint statement and the push for an end date for fossil-only powered newbuild ships reflect a growing recognition of the need for sustainability in the shipping sector.

Soren Toft’s emphasis on the importance of a tangible supply of alternative fuels and globally recognized pricing for greenhouse gas emissions highlights the practical challenges that need to be addressed for a successful transition to greener practices. The proposal for a “pricing mechanism” to support the competitiveness of green fuels during the transitional period is a notable suggestion, as economic incentives often play a crucial role in driving industry-wide changes.

The commitment of major carriers, such as Maersk and CMA CGM, to invest in and adopt greener technologies is encouraging. Maersk’s goal of achieving net-zero greenhouse gas emissions by 2040 and its investment in vessels running on green methanol showcase a dedication to environmental responsibility. Similarly, CMA CGM’s substantial investment in decarbonizing its fleet, including the shift from methanol to LNG, demonstrates a commitment to exploring various sustainable options.

The industry’s acknowledgment of the challenges ahead, particularly with the downturn in container rates and the anticipated difficulties in 2024, underscores the complex nature of transitioning to more sustainable practices. However, the collective efforts and commitments from industry leaders, coupled with regulatory support from organizations like the International Maritime Organization (IMO), are crucial for driving positive change and reducing the carbon footprint of the shipping industry.

Import: 

  • Ongoing industrial disruption at Australian DP World main ports and its impact on vessel schedules to New Zealand. Labor disputes, strikes, or other industrial actions can indeed have significant ripple effects on supply chains and trade routes, causing delays and disruptions.
  • Such situations often involve negotiations between labor unions and management over various issues, including wages, working conditions, and benefits. The outcomes of these negotiations can have far-reaching consequences for businesses, shippers, and the broader economy.

 

  • It seems there will be extended track closures affecting freight services in and out of Wellington by KiwiRail from December 25th, 2023, to January 7th, 2024. Track closures of this duration can have significant implications for the transportation of goods and may lead to disruptions in supply chains.
  • During such closures, alternative transportation arrangements or contingency plans may be necessary to ensure the smooth flow of freight. It’s common for rail operators to communicate closely with their clients, shipping companies, and relevant stakeholders to mitigate the impact of such disruptions.
  • If you are directly involved or impacted by these track closures, it would be advisable to stay in close contact with KiwiRail for updates and information on contingency measures. Additionally, local news sources and industry publications may provide more details on how this situation is unfolding and its broader implications for logistics and transportation in the region.

 

  • The scheduled block of line shutdown for maintenance between Metroport and Port of Tauranga from December 30th, 2023, to January 3rd, 2024, will likely have a notable impact on container movements during that period. Such planned maintenance is common in the transportation industry to ensure the safety and efficiency of rail infrastructure.
  • During this shutdown, it’s expected that container movements to and from this specific route will be temporarily halted. The reduction in services two days before and after the shutdown is likely part of the preparation and recovery process.
  • For businesses and entities involved in the transport and logistics chain along this route, it’s crucial to plan ahead, make necessary adjustments to schedules, and communicate effectively with clients and partners to manage expectations during this period.
  • As with any significant service interruptions, staying informed through updates from the rail operator, local news sources, or industry communications will be essential to navigate the situation effectively.

 

  • It seems that as of December 11, 2023, there has been a change in the steel research levy in accordance with the Heavy Engineering Research Levy Act 1998. The adjustment involves an increase in levy rates from $10 per tonne to $20 per tonne for all items listed in Schedule 2 of the mentioned act.
  • The steel research levy is typically imposed to fund research and development activities in the steel industry. This increase in levy rates suggests that there might be a need for additional funding to support ongoing or new research initiatives, or it could be a response to changes in the industry landscape.
  • For businesses and individuals involved in the steel industry or those affected by these changes, it would be important to be aware of the new levy rates and incorporate them into financial planning and budgeting. Additionally, staying informed about the specific projects or initiatives that the levy funds could provide insights into the industry’s direction and priorities.

As the economy continues to recover from the effects of the COVID-19 pandemic, businesses and consumers alike are feeling the strain of increased import and export activity. Regrettably, congestion at mainly Auckland Container depots has deteriorated further since the last update. Capacity in the main centres, especially Auckland, are operating at an overcapacity level and unable to handle the volume of empty containers for dehire or turn around units to make them available for export use.

Key depots have either shut altogether for lengthy periods or greatly restricted the number of acceptance bookings issued. Often the only option for trucking companies is to uplift the empty container(s) from importers premises and then hub 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. It will take some time to redress the imbalance even with a concerted effort to reuse containers for export, evacuate unused empties out of New Zealand as the latter requires redirection of scarce resources away from handling import containers.

We are taking issue with Shipping Lines currently not offering any relief on detention due to the unavoidable delay in dehires. This is a major concern for importers, as it results in additional costs and delays in receiving their shipments.

There is an ongoing resourcing issue in the New Zealand supply chain driven by a long-term lack of skilled & semi-skilled labour. A resurgence in covid, along with staff absenteeism for other reasons, is and will continue to be a major factor hindering the Ports, warehousing, and trucking companies’ ability to cope with existing volumes. With warehouse storage capacity for imports at a premium coupled with no relief on demurrage or detention, importers should plan to have resources available to receive incoming shipments over the upcoming short weeks.

On top of that, VBS (Container booking) charges will increase again in February with a rise in Metroport VBS charges closely following announced adjustments to be billed by Ports of Auckland from 1st January 2023. This is a significant increase for importers and exporters and will further add to the financial burden caused by the delays and congestion at the ports.

Exporters are also facing their own set of challenges. Congestion at the Port of Tauranga continues with slight easing. Vessel arrival and close off dates constantly change. Exporters should monitor the Port of Tauranga website closely and aim to have their containers on port at the first opportunity.

Equipment shortages continue for Hapag Lloyd, ANL, & CMA CGM & Maersk, Nelson, Port Chalmers, and Napier are the most impacted. This is causing delays in the loading and unloading of containers and further adding to the congestion at the ports.

In conclusion, businesses importing and exporting goods to and from New Zealand are facing significant challenges due to the ongoing congestion at the ports and the lack of skilled labor. As a result, importers and exporters should expect delays and additional costs and plan accordingly.

Serving New Zealand’s importers and exporters with professional and dedicated freight forwarding services. Our local and international networks and partners ensure that your goods are delivered on time.

The key to our great service is transparency, great service and competitive rates. Apart from that there is no secret sauce. We provide what we promise. Your business success is important to us, because frankly that leads to our business success! Our business is built on your business.

If you are a New Zealand SME that imports and / or exports we would like to hear from you. If you dont feel your current forwarder is providing the service you need then we can help. We are totally confident that our service, rates and communication will be a breath of fresh air.

As we head towards Christmas we are still experiencing large volumes inbound to New Zealand. Some shipping lines are refusing bookings for a month in advance, and not offering rates beyond that.

The best course of action is to get bookings in as early as possible and our team can let you know the best current options.

China will be back from their Mid Autumn Festival today so expect these issues to carry on until Christmas.

Sydney continues to clear congestion after their industrial action, again with backlogs but at least things are moving now.

Export space is still ok. If you are looking to negotiate rates for your 2021 export season now is the time. Don’t leave it much longer because the shipping lines will have committed their space allocations before Christmas.

As we head into the import peak season the shipping lines are continuing to control space to increase rates. The August 1st GRI’s have partially held and the shipping lines have issued notices advising of a USD 300/20′ and USD 600/40′ increase from Asia from sailings after September 1st.
There is still some space with some shipping lines, but to obtain the preferential rates it is best to book 2 – 3 weeks in advance.

Air freight rates have stabilized as the air lines have transitioned to a new model of cargo only flights, though the most important airline for us (Singapore Airline / SQ) is full and experiencing delays hubbing freight in Singapore.

Again the key is to get requests and orders in as early as possible as this gives the most options for your shipments.

New Zealand will move into level 2 lockdown from 11:59pm on the 13th of May.
This continues to ease restrictions on business with schools and restaurants also being allowed to operate.
There are still sanitary requirements and it may take some time for manufacturers to become fully operational again, but most businesses we work with are now running.
Sea freight continues to have capacity with rates stable or marginally lower after the Chinese New Year period.
Air freight is still at a premium for imports but we do have good options ex China, USA and Australia for you. Exports are the beneficiary of more airlines offering cargo only services on a scheduled basis – including Emirates (EK) now having 3 scheduled flights per week. They provide a major gateway to Europe and the Middle East via Dubai.

Air New Zealand and other airlines have re purposed their passenger aircraft to carry freight only. This means that we now have access to space to move your air freight shipments to/ from Shanghai, Hong Kong and Frankfurt to Auckland.

The aircraft that we are using for Shanghai have maintained their passenger status so we are able to move some forms of hand sanitiser (or unlimited quantities if it is not DG).

The reason Shanghai, Hong Kong and Frankfurt airports are so important is because they are gateways. So even if your airfreight shipment is not destined or from these areas it is likely we can connect with other airlines at these ports and move your shipments on.

Please contact us today to get your air freight shipments moving again.