After monitoring global supply chains since June 2020, The Ministry of Foreign Affairs and Trade has just released its industry report. The report emphasises the stabilisation of sea freight, Covid-19 policy changes across the globe, industrial action affecting several ports and railways and Ukrainian grain initiatives that aim to address shortages in Africa.
Sea Freight - global prices have continued to stabilise, with the average price for shipping a 40-foot container across significant shipping lanes sitting at US$2,238, compared to US$5,286 in September 2022. Pre-Covid rates sat around US$1,515. New Zealand may be slow to benefit from reduced shipping costs as the country is at the end of global supply chains and faces a weak dollar and high wage costs. Delivery times have improved, Transpacific Eastbound travel has decreased from 86 days to 69 days, and Far East Westbound travel has reduced from 96 days to 74 days. Precovid travel times sat under 60 days. South Korea, France and Kenya have all been affected by employee strikes in the industry. The global sea freight capacity looks to increase as there are 7.1 million twenty-foot equivalent units on order.
Air Freight - New Zealand’s air connectivity has grown substantially in the last few months. American Airlines, Air Canada and Virgin Australia have all extended travel lines between countries. Each Air Canada flight from Auckland to Vancouver carries 29-36 tonnes of cargo alone. Passenger flight operation has realigned with peak season; in December, 2,092 flights operated and offered exporters additional cargo capacity. More cargo-only flights have been operating. Air New Zealand operated two extra cargo-only flights to deliver 500 tonnes of cherries and 350 tonnes of seafood to Shanghai and Taipei for the Lunar New Year. However, high prices and labour shortages continue to disrupt the aviation industry.
Supply Chain Resilience - In December, the first in-person negotiation for the Indo-Pacific Economic Framework for Prosperity took place in Australia. Negotiation continued through February and will see resilience in the supply chain. Canada has expressed interest in joining the initiative and has pledged CAD$240.6 million as an investment in the Indo-Pacific region.
Asia - China is now managing Covid-19 under Category B protocols. The relaxed measures mean quarantine is no longer necessary, and imported goods need not be tested for Covid-19 traces. Air freight capacity continues to increase, and Air New Zealand reported an immediate surge of bookings when opening more passenger flights. Two cargo-only services are operated weekly from Auckland to Shanghai. Chinese airports are now also open for international passenger transfer connections.
Americas - Low water levels in the Mississippi River in October caused congestion and $20 million in economic losses, and officials are still working on deepening the river and dredging sediment. In November, temporary market access was provided for New Zealands a2 infant milk formula in response to the USA shortage. The USA also passed legislation under the Railway Labour Act in December that prevented 115,000 rail workers from striking, as 30 percent of domestic cargo relies on its operation.
Australia - TS Lines launched a new shipping service between Brisbane and New Zealand in November, a welcome relief for several transport companies. The Government has also appointed a task force to establish a fleet of Australian-flagged maritime vessels that will be privately owned and commercially operated - but also available to the Government in emergencies.
Europe - Pay deals have been accepted by Unions for workers at the Ports of Liverpool and Felixstowe in the UK that hope to avoid export disruptions. Germany has introduced a new law to protect the environment and human rights in supply chains that requires companies with over 3,000 employees to introduce risk management and public reporting. These requirements will be extended to companies with more than 1,000 workers in 2024 and could require overseas supplies to follow the same measures. The European Commission is drafting
laws that will prohibit the sale of products made with forced labour in the EU market to counter modern slavery across global supply chains.
War in Ukraine - The Black Sea Grain initiative facilitates agricultural exports from Ukraine through the Black Sea, as well as food and fertiliser exports from Russia allowed until March 2023. Grain From Ukraine is the initiative that has been launched to deliver 60 vessels of grain to Africa and the Middle East by mid-2023 to alleviate shortages and food insecurity. Each ship will carry 25,000 tonnes of grain, costing US$9-11 million. Over US$180 million has been raised from 30 countries to facilitate deliveries. The European Bank for Construction and Development has announced it will contribute US$840 million to upgrade Poland’s deep water port in Gdansk, making it one of Europe's top ten most significant ports. Work is due to be completed in 2025.
Middle East - Saudi Arabia has launched a Global Supply Chain Resilience initiative that will see US$2.6 billion made available to turn the nation into a global logistics hub.