Slow cargo flow no good for export goals

New Zealand’s largest cargo owners are stepping up calls for increased supply chain productivity.

Mike Knowles.

In the face of increasing global trading uncertainty, the NZ Cargo Owners Council argues the best mitigation is to ensure the country has the most efficient supply chain possible.

“Global shocks to the supply chain will keep occurring,” says Council Chair Mike Knowles. “Because of our distance to and from international markets, we are already coming from behind.

“To be competitive, it is imperative that we focus on what we can control and operate an efficient, highly productive freight supply chain across our roads, rail, and ports.”

COVID-19 was a wake-up call — a major disruption that shone a spotlight on the vulnerability of our supply chains. But it has not been followed by meaningful improvement in the NZ supply chain.

“In fact, it’s worse than that,” Knowles says. “Where most other countries we trade with have returned to pre-COVID levels of supply chain productivity (e.g. the efficiency with which they move goods through ports), NZ has not.

“For example, overall NZ crane rates (lifts per hour) have dropped 20 per cent since 2018.”

This does not bode well for the aspirational goal of doubling exports. Worse, it presents a real risk that international shipping lines will reduce their port calls because of the length of time it takes to service our ports, he says.

The Council represents the shipping supply chain interests of many of the country’s largest exporters and importers, spanning companies with major interests in industries such as horticulture, dairy, meat, steel, forestry, timber, and pulp and paper.

Current members collectively account for in excess of 70 per cent of NZ’s containerised exports, and a significant amount of bulk export, imports, and domestic volume.

They include Fonterra, Zespri, Silver Fern Farms, T&G Global, Alliance Group, AFFCO, ANZCO, Synlait, Westland Milk Products, Dominion Salt, Ravensdown, and Ballance Agri-Nutrients.

Government needs to get its act together and prioritise supply chain improvement if it is serious about lifting exports, Knowles says.

The Tauranga Port berth extension is a case in point.

“We’ve literally been waiting for years for this much-needed infrastructure to enable greater flows of cargo through the port.

“Government’s failure to prioritise this has been a significant handbrake on growth and an accelerant of congestion — both of which impact the entire supply chain, ultimately adding extra costs and undermining the nation’s competitiveness.

“The Tauranga wharf extension will be accompanied by much-needed automation. This will hopefully spur other ports into similar investment.”

For too long, politicians have not paid enough attention to factors that constrain NZ’s ability to move exports through the road, rail, and port network into international markets.

“Issues of supply chain productivity should be front and centre as New Zealand Inc. grapples with the need to drive export growth.”

As well as productivity, the Council is also worried about advice to the Minister for Climate Change to include emissions from international shipping in NZ’s ETS.

“There’s real concern amongst our members that, given the process the International Maritime Organisation (IMO) is currently working through to lower international shipping emissions — which looks likely to culminate in a carbon levy on all international shipping emissions — NZ’s exporters and importers would be burdened with multiple surcharges.

“It does not make sense that NZ should be trying to get ahead of the IMO in this area. Having multiple schemes charging for the same carbon emissions will be a disaster for NZ’s exporters and importers,” Knowles says.