Exporters ‘held at ransom’

Local exporters say they will be forced to reduce their crop size if shipping delays and cost increases continue.

Covid-19 has meant local export companies have faced on-going challenges getting produce shipped overseas.

One exporter, who asked not to be named, says some shipping companies are asking for considerably more money to bring empty containers into New Zealand ports.

“We are held at ransom to pay what they ask, or we don’t get the empty containers.”

He says it was a very tough year last year with both shortage of shipping containers and disruption to shipping schedules. While he is quietly hopeful they will get through this season, realistically he is expecting to run into shortages which could be extreme.

Boysenberries New Zealand managing director, Julian Raine, says it is definitely not business as usual.

“There has been a massive change in how ships load and discharge their freight,” he says.

While ships are still getting into ports, space is limited.

“Where we may want 10 containers, we can only get two.”

It is not only the lack of space causing difficulties, what did take a month, now takes two as shipping routes are rearranged.

“There are times that containers go to a transit point and sit there for a month,” he says.

Julian says some shipping companies now refuse to go to certain ports.

“As with airlines, ships operate through hubs. Where a certain ship would use a particular hub, that is changing as well.”

Pricing has in some instances quadrupled. For local businesses, the best-case scenario with the price increases is that their customer takes on the increase.

“Those cases are few and far between,” Julian says.

Most often, the price increase is equally absorbed by both the New Zealand company and their customer. At times, the New Zealand exporter must cover all the increased costs, which leads to growers getting significantly lower prices.

In the year to July 2021 there was a dramatic 600 per cent increase in container freight prices leaving small exporters struggling to get their goods to international markets.

Julian says produce moving more slowly around the world, and in some cases not being shipped at all, creates shortages.

While it may seem favourable to the New Zealand public when produce isn’t shipped and remains in New Zealand, the resulting lowered costs are only temporary.

“It’s wishful thinking that produce staying in the country will mean cheaper fruit and vegetables,” Julian says. “That is not always best in the mid and long term.”

He says if growers are not making money, they will stop growing. Tomatoes that were not able to be shipped last year led to a glut in the New Zealand market.

Julian says it looked like the customer won, but that was only temporary.
Growers reduced their planting.

“The ramifications are the New Zealand public are paying double what they paid last year.

In September a Port Nelson spokesperson said shipping volatility would continue to impact global shipping for the next 12 to 18 months and freight costs would remain high.

In the long term, as congestion levels ease, record high freight costs should reduce. However, industry experts suggest this may not happen for another two years.

Congestion has been felt by both importers and exporters with the inability to obtain products in a timely manner.

In May 2021 space became a premium and for the first time in Port Nelson’s history they were forced to close for receivals.

Boxman Containers Nelson owner and manager Mat Charles says supply of containers is tight everywhere in the world.  

Boxman Containers supply domestic storage and Mat says they have had increased business as the demand for local storage grows.

He says because importers know the supply chain can be a nightmare, they are holding more stock than pre-covid.

“The ‘just in time’ theory has been replaced by ‘just in case,’” Mat says. “If they can bring it into the country they will.”