Maritime Union backs freight industry's concerns over shipping line 'profiteering'

Saturday, 12 June 2021

'Lumpy' supply chain - Ports of Auckland faces troubling times (Video from December 2020)

The vulnerability of New Zealand’s trade links has been laid bare in the last year as ongoing supply chain congestion and a surge in the cost of freight continue to cause damage to the economy, Maritime Union national secretary Craig Harrison says.

Earlier this week Mainfreight managing director Don Braid said shipping lines had been “profiteering” from the chaos caused by Covid-19 with skyrocketing rates.

Shipping lines have defended their record.

But Harrison agreed with Mainfreight’s complaint. “New Zealand is dependent on global shipping lines whose interests are not the same as New Zealand’s,” he said.

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Mainfreight managing director Don Braid says international shipping lines are taking advantage of the chaos in global supply chains caused by Covid-19.

Mainfreight has been chartering vessels to move cargo internationally and keep up with demand, something it had not previously done. Harrison said the move signalled a change in thinking in response to a broken global logistics system.

“Now we need to focus on new solutions that provide security and reliability,” he said.

Feeder services between main hub ports and smaller ports were one way of doing this, he said. While international vessels could carry domestic freight between local ports, they were missing port calls due to other priorities.

“The only people benefiting from the current chaos are global shipping companies,” he said.

Braid said shipping lines ought to be thinking about long-term profit. “It's easy to gouge the market short term, but it doesn't win too much loyalty.”

It was clear that shipping lines were making up for the low returns they were getting pre-Covid, he said.

While their operating costs had undoubtedly increased, a more responsible approach needed to be taken, he said.

Maersk Oceania market head My Therese Blank responded by saying it had seen a significant increase in demand for container shipping demand over the past six months, coupled with disruption caused by global port congestion and industrial action in Australia, that had impacted its schedules.

Ships had been waiting 12 days to berth at Ports of Auckland earlier this year, increasing round trip sailing times from 35 days to 47 days, she said.

“This is the same as someone having to pay for 100 per cent of a warehouse while only able to utilise 66 per cent of the space,” she said.

A national ports strategy designed to serve national requirements rather than ongoing parochial competition between ports is needed, says the Maritime Union’s Craig Harrison.

“We still need to cover the cost for the vessels.

“Similarly, our container turn-time is increasing due to the schedule delays which is the key root cause for the shortage of empty containers, in addition to the surge in demand,” she said.

Blank said Maersk had responded by adding a seventh vessel to its Southern Star service, introducing a coastal shipping service to better distribute empty containers across New Zealand ports, and by deploying additional vessels on an “ad-hoc basis” to minimise disruption.

Maersk’s operating costs had increased as a result of the investments and because it was sailing ships at a faster speed and rerouting them to meet demand, which raised fuel bills, she said.

“Whilst we understand the challenge for industry during these unprecedented times, shipping costs remain less than 1 per cent of global goods’ value,” she said.

Harrison said a ports’ strategy designed to serve national requirements, rather than ongoing parochial competition between ports, was needed.

But Braid said it was time for action, not more talk.

There had been enough work done on port strategies over the years and it was now time to push something through, he said, describing it as “crazy” to have 13 ports with container cranes competing with one another.

Long-term strategic planning was sacrificed in the three-year election cycle and more long-term thinking was needed from the Government, he said.

Transport Minister Michael Wood said a number of agencies were looking at supply chain congestion, and the Ministry of Transport was helping to co-ordinate the work through an interagency group.

Wood had also asked the ministry to begin work on a national freight and supply chain strategy with supply chain resilience as a key objective. It would identify challenges and opportunities, including in the coastal shipping sector, he said.

“I expect this work to get under way in the latter half of this year and take around 18 months.”

The ministry was also supporting the Transport Agency in looking at investment opportunities through its coastal shipping activity class. A report was due in the coming months, he said.