21st September 2021 By Bridget O'Connell | email@example.com | @foodtickernz
Global supply chain disruption is forecast to continue well into next year with no return to pre-pandemic pricing even when the current ocean freight congestion is unwound, according to Australasian logistics leader Toll Group.
Speaking on a New Zealand Food & Grocery Council ocean freight webinar, Toll Group general manager for Australia New Zealand, Tom Holyman, said that delays, disruption and price increases would continue until after Chinese New Year in February next year.
“Despite paying record prices, we are seeing record low reliability,” Holyman said.
“Some might argue we are paying the highest prices for the lowest levels of service we have seen in container shipping for many decades.”
Since the onset of the pandemic, New Zealand food firms both importing and exporting goods have seen shipping costs skyrocket.
Fivefold increases have been reported as Covid port shutdown delays cascaded through the supply chain with some shipping companies dropping New Zealand from their schedules to make back lost time and focus on more profitable ports.
“I expect pricing to continue to increase up until Chinese New Year so February 2022,” he said.
Holyman forecast the rough rate of increase for twenty-foot equivalent units, or TEU, which is the shipping industry’s standard measurement for containers, to continue to rise at around $500 per TEU per month for spot rates.
On contract rates, he forecast a move from what would have been around US$1500 per TEU from Asia into NZ to somewhere between US$2,500 – US$3,000 a TEU next year.
“I think carriers have shown a preparedness to pull tonnage out to balance the supply side where there is no demand in non-peak season and then re-introduce tonnage in peak season to meet that demand,” Holyman said.
“So, I don’t expect post-pandemic, if we ever return to a normal world, that we will again see the low levels of pricing that we saw prior to Covid.
“We all need to be prepared for pricing, that although it may not stay at today’s levels or where I see it going next year, certainly they won’t go back to the levels we saw in 2019.”
Leading exporters such as produce company T&G Global, kiwifruit exporter Zespri and seafood and meat specialist Talley’s have responded by chartering their own ships, but others, especially smaller companies, have no choice but to wear the increased costs.
Holyman noted one “ray of light” for the upcoming peak Christmas and summer period: he did not forecast any increased level of disruption in November, December and January and some reprieve might be on the way from North America.
“I would say [the disruption] will be no more than last year because frankly I can’t imagine it getting any worse than that,” Holyman said.
“There is a bit of science behind that, the ships that are leaving Asia and coming to New Zealand are already full. I believe they will continue to be full and so therefore the current disruption we are experiencing, I don’t think that will get significantly worse.
“There is a little ray of light that the North American peak season… is coming to an end. And that may – it may – free up some resources in terms of vessels or containers in particular.”
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