The COVID-19 pandemic is still affecting global supply chains, and the short-term outlook is not looking great.
With traffic jams of container ships building up around Auckland and Tauranga ports, Phil Barnes, general manager at Move Logistics shared his thoughts on what type of products are most at risk for delays and what the future might look like.
“It’s certainly a tough time for the ports and the knock-on effect on both the rail and roading networks across New Zealand,” noted Barnes.
With severe port congestion, high inbound container volumes, and the onset of peak-time for retail and food and beverage importers, indications suggest that the backlog isn’t likely to be fully cleared until Q1 2021. This will leave many importers (and exporters) waiting on stock to arrive/depart or be delivered. There has also been a reduction in many shipping services into New Zealand, whether because of cancellations or a change to port stops, Barnes explained that this I placing further strain on the rail and roading networks to take up the slack to ensure goods reach their destination.
“Traditionally we always relied on coastal, rail and road services for any distributions but with volumes southbound at a record high, particularly right now, space has become a premium.”
Priority has certainly been given to the clearance of ‘essential goods’, meaning there could be delays to non-essential items, a challenging situation for the festive season.
“Much of the dialogue has been around clearing the ever-mounting volumes of inbound goods, however, to ensure even container flows,” said Barnes.
Regarding supply chain bottlenecks, Barnes commented that there is a combination of different factors to consider, including the pandemic, but also service disruptions out of Australia due to both industrial action and service cancellations, high inbound volumes, incidents at the Ports of Auckland, and equipment issues.
Shipping lines have introduced ‘Port Congestion’ surcharges which are then passed on to New Zealand businesses.
“A ship can’t float around the seas waiting for a berthing spot so, whilst this is an inconvenience, it is completely understandable that costs have to be recovered.”
According to Barnes, the full extent of the impact of COVID-19 is unknown and changing rapidly. What is certain, however, is that now is the time to prepare for potential economic disruptions
through the supply chain. A clear forecast of business requirements is needed as well as a view of supply chain vulnerabilities, category response plans. Businesses should actively monitor supply
chains and adjust when necessary.
“I think the complete supply chain of goods into New Zealand requires a full re-think and an upgrade whether that be the types of services offered or the expectation set on delivery times/windows,” concluded Barnes.
“Those of us on the ground in Warehousing and Distribution can see the impacts coming well in advance given our clients entrusting us with their 3PL and visibility of their inventory so can
communicate the impending impact should there be we need to do so.”